What is Professional Indemnity Insurance?
Professional Indemnity Insurance is an insurance policy designed to help protect organisations, institutions and companies for situations where the service user alleges that the service is inadequate.
Any organisation which provides a professional service or gives advice could be sued if the recipient is unhappy with their work, that the service was deficient and that this has left them with a financial loss. For universities this is usually around the risk of failure to educate claims but can also include elements in respect of service to third parties with whom you are engaged.
How is Indemnity determined?
Like other Liability policies, PI is 'negligence based' or can relate to an alleged breach of professional duty. This poor conduct can then result in a financial loss, physical damage or injury to those in receipt of the service. For a university this would principally be the student but could involve other third parties to whom the University owe a duty of care.
A claim of professional negligence can be made against anyone considered to have expertise in the services they provide. For the claim to be successful there must be evidence that the service provided fell below the standards of their profession, resulting in negative consequences.
This means that a third party has to prove that your institution has been negligent in delivery of services. There is plenty of case law outlining how negligence is proven including cases involving universities.
What does PI Insurance cover?
Professional Indemnity Insurance provides legal costs and settlement awards against your institution up to the Liability Limit within the policy for claims on negligence resulting in financial loss. It also extends to areas such as breaches of confidentiality, defamation and intellectual property rights.
Why is this cover important for Universities?
As with other insurance covers PI is important because it can provide financial and legal support when claims are brought. Such claims can be complex and lengthy and costs can be significant. In a sector where the student is increasingly seen as a 'consumer' it is considered a likelihood that claims where the education provided isn't considered to be adequate will increase.
It is also relevant when engaging with third parties commercially who will expect PI insurance to be in place. Research projects undertaken in partnership with commercial organisations will often have confidentiality requirements built into the contract and failure to observe these correctly could lead to significant claims against the University from the commercial partner for loss of future revenue.
Similarly, unauthorised use of third party intellectual property in such research cold lead to claims from both the commercial partner and the intellectual property rights holder.
When should PI claims be notified?
Claims (and circumstances that might reasonably be expected to produce a claim against you) must be notified to insurers as soon as reasonably possible. Claims conditions vary on different policies. Some are more onerous in insisting that claims must be reported in a set timescale and this should be checked in the policy.
It is important to note that claims or circumstances should be notified irrespective of either views as to whether or not such such claim will succeed or the amount of the claim will exceed the policy excess.
It is widely acknowledged that incidents that start small in scale can escalate over the longer term to more serious, and costly scenarios.