One of the areas of greatest confusion is the difference between professional compensation, general liability and product liability insurance. Professional liability insurance provides cover to professionals (companies or individuals) for any act of negligence, error or omission that may have occurred in the exercise of their professional activities and duties. It differs from general liability and product liability coverage in that the acts covered are acts performed by an engineer, architect, doctor or lawyer in the context of the provision of professional services to their clients. To better understand this coverage, we will have a brief discussion below of product liability, professional compensation and the application of the latter and its operation.
A. Product liability
Product liability is the legal responsibility of a manufacturer towards a consumer of his product. Liability arises from careless manufacturing of a product, including faulty or defective manufacturing, materials or components. It is a liability that arises from a manufacturer’s inability to properly manufacture, test or warn their product and occurs when the product negligently departs from its intended function.
Product risks include bodily injury or property damage resulting from the products of the named insured, but only if bodily injury or property damage occurs outside the premises owned or rented by the named insured and after physical possession of the products has been discontinued by third parties and is mainstream in trade.
Completed operations include bodily injury and property damage resulting from operations or use of any representation or warranty made at any time in this regard, but only if bodily injury or property damage occurs after these operations have been completed or abandoned and occur far from the scene. owned or rented to the named insured.
The negligence attributable to professional liability, which includes services or consultations rendered negligently by architects, engineers or other professionals, is excluded from the coverage of general liability and product liability.
B. Professional allowance
The professional compensation policy is designed to respond to the exclusion of professional services in the CGL / product liability policy. The professional compensation policy covers the negligent services of a professional to his client and covers an act of negligence, error or omission on the part of an insured in the execution of his professional activities. These professional activities generally include design, specification writing, feasibility studies, calculations, maps and their supervision by the insured professional.
Professional indemnity or errors and omissions, the insurance protects an insured, its employees and administrators against the liability arising from their professional negligence. It covers the legal responsibility to compensate a third party who has suffered damage, loss or damage created by the existence of a duty of care due to third parties as a result of a negligent act, an error or an omission in the provision of professional services by the insured.
In light of today’s increasingly litigious society, professional liability insurance offers important protection to insured professionals.
Coverage applies under the professional indemnity policy from the start of product design and provides protection against any act of professional negligence, error or omission that would result in a claim by third parties.
C. Applicability of professional indemnity cover
When discussing the applicability of professional indemnity coverage, there are some basic principles to keep in mind.
First, professional indemnity is third party coverage which is liability coverage, not property coverage, which is provided to the insured for claims against the insured of third party claimants.
Second, while the cover is attached from the start of the project design phase, a claim will only be made after the delivery of the product and the product has left the premises of the insured.
Liability coverage that occurs in the insured’s workplace must be found elsewhere, such as General Liability, Builder or All Risk or Protection and Compensation policies.
Third, of course, the claim must result from a failure of the professional services provided. There is limited coverage offered by professional liability for faulty manufacturing, materials and / or components. In addition, product liability coverage would include any claims for defective materials or components, manufacturing or manufacturing defects.
Fourth, any unintentional and unintentional infringement of a patent or copyright infringement is also covered by this policy.