Broadly speaking a professional indemnity policy is designed to provide cover for claims arising from the provision of a professional service. This includes cover for a claim arising out of bodily injury providing it’s not related to Asbestos and providing the injury is incurred by someone other than an employee of the company.
A public liability policy provides cover where a business causes an injury to a member of the public, or property belonging to another business or individual. However the cover will not respond if the injury or damage has been caused in the course of providing a professional service. This exclusion will apply to all but the largest property managers who may have the professional services exclusion removed from their public liability wording.
It is important that you understand which policy covers which claims so that you can ensure that the correct insurer is notified in the event of a claim.
These examples are designed to demonstrate which policy should respond:
Case study 1
Mrs Brown is the tenant at 25, Garden Crescent. Your firm manages the property. Mrs Brown has previously complained about excessive wear to the stair carpet. She subsequently falls down the stairs and apportions blame to the fact that the stair carpet is worn. Property management is a professional service and as such the notification of claim should be mad to the professional indemnity policy.
If the Landlord in the case highlighted above has been advised about the condition of the carpet and has failed to do anything about it, the matter should also be raised with the landlord who should ultimately be liable for the claim. This does not however negate the requirement to notify your professional indemnity insurers. Your professional indemnity broker should be able to offer guidance on raising the matter with the landlord and may also assist in drafting an appropriate letter.
Case study 2
Mr Rogers visits one of your estate agency branches. Water has been spilt on the floor and Mr Rogers slips over when entering the branch. He incurs a broken ankle. Whilst Estate Agency is a professional service, Mr Rogers was merely visiting the branch. A professional service is not being provided and as such the public liability policy should be notified.
Public Liability policies will typically carry a far lower self-insured excess than the PI policy. It may therefore be tempting to notify the PL policy, rather than the PI policy. However PL insurers may rightfully seek to void the claim. Where PL insurers do cover the claim, it is likely to result in an increase in the cost of your Commercial Combined insurance.
These examples are fairly clear cut. It may not always be so obvious which policy should respond. If you are in doubt about which policy to notify you should notify both policies which should ideally be managed by the same insurance broker.