Defence Contractors and Consultants who provide professional services can face claims alleging that their advice, design or technical work caused financial loss.

Professional Indemnity Insurance can respond to certain insured claims of this type.

What services can create Professional Indemnity exposure? #

Examples can include:

• Engineering advice.
• Design services.
• Technical consulting.
• Project management.
• Systems advice.
• Documentation.
• Testing and certification.
• Risk advice.
• Specialist consulting.

The insurer needs to understand the actual professional services performed.

What types of allegations can arise? #

A claim could involve allegations such as:

• Design error.
• Incorrect technical advice.
• Failure to meet a professional standard.
• Errors in documentation.
• Incorrect specifications.
• Failure to identify a material risk.
• Project management errors.

The actual response depends on the policy and circumstances.

Does PI Insurance cover every contractual obligation? #

No.

Defence and major contractor agreements can contain indemnities, warranties, guarantees and other liability provisions.

Professional Indemnity Insurance should not be assumed to cover liability accepted solely because of a contract.

Insurance requirements and contractual liability provisions should be reviewed before significant agreements are signed.

What about classified or sensitive work? #

The nature of the services and information involved should be disclosed where relevant to underwriting.

Security obligations imposed by Defence are separate from the Professional Indemnity policy.