Civil & Negligent Liability Differences

Below we explain the vital differences between Civil Liability and Negligence Liability coverage for professionals.

What does Civil Liability cover mean?

Civil liability cover extends to any liability claim brought against you in a civil court. Cover is not provided for claims brought against you in a criminal court.

In its very simplest form under a civil liability wording if a claim isn’t specifically excluded then it is assumed to be included! It is considered to be a broader wording as the interpretation of what could be considered a claim tends to be more comprehensive.

Why is this significant?

This is significant regarding coverage as rules and legislation change often and most businesses may not always be aware of them. Consequently if an insured is found liable for damages in a civil court due to their advice they “may” be covered – even when it is not specifically included in the policy – as long as it’s not an exclusion it could be a Professional Indemnity claim.

The 4 main areas of Civil Law include:

  • Tort Law (negligence, nuisance defamation)
  • Contract Law (breach of conduct)
  • Statutory Law (consumer protection legislation)
  • Equity (principle of fairness)

How does a Negligence Policy cover differ?

Again in its simplest form – if a claim type is not specifically included in the policy … it is excluded. The intention of a Negligence Liability policy is to cover losses where it can be shown that:

  1. the insured owed a duty of care to the claimant
  2. they breached that duty and
  3. their breach caused a financial loss

But more importantly it needs to be proved that the insured was “negligent” and breached their standard of professional care. This is ok if a breach falls under the Tort of Negligence but what if claim is due to other legal grounds such as libel and slander, copyright infringement or misrepresentation?

These liability examples do not fall under the tort of negligence and could be denied by the insurer. Therefore, a Negligence policy cover differs from a Civil Liability policy cover in as much as it’s considered to be more restrictive in its scope of cover as negligence is only part of the total risk exposure to should be considered.

Fundamentally the difference in coverage lies in the nature of the liability in carrying out their Professional Services:

  • Civil Liability policy cover will focus on the Nature of the liability concerned;
  • Negligence policy cover will focus on the actual Conduct of the insured.

With over 40 years experience providing professional advice and services to business enterprises looking to purchase insurance, Donnellys understand the needs of Adelaide businesses.

For further information or enquiries about Professional Indemnity insurance Adelaide, contact Donnellys today.