The Evolution of PI Operative Clauses
Originally, professional indemnity operative clauses only covered insureds against their own negligence (negligence-based wordings). This caused issues as insureds weren’t just sued in negligence but were also sued under contract.
The Problem with Narrow Wordings
Many insurers still use a "breach of professional duty" limitation in their operative clause. This can leave gaps in coverage when:
- Clients are sued for breach of contract
- Claims arise from legislative requirements
- Actions are brought under consumer protection laws
The FTA Difference
FTA’s standard professional indemnity wording does not have the "breach of professional duty" limitation that many competitors include.
To obtain the broadest coverage, make sure the professional indemnity insuring clause covers civil liability without this limitation.
What is Civil Liability?
Some insurers, like FTA, introduced a civil liability operative clause that provides protection against any and all civil liability that an insured might be sued for. This encompasses all causes of action such as:
- Negligence
- Breach of contract
- Breach of statutory duty
- Misleading and deceptive conduct
Key Takeaways for Brokers
- Review the operative clause carefully – Don’t just focus on exclusions
- Look for "civil liability" wording – This provides the broadest coverage
- Avoid "breach of professional duty" limitations – These can create coverage gaps
- Ask about FTA’s wording – We provide full civil liability coverage as standard
Need More Information?
Contact our underwriting team to discuss how FTA’s civil liability wording can provide better protection for your clients.
Phone: 02 8823 8888
Email: info@ftainsurance.com.au