Legal Liability vs. Civil Liability Wordings – Why Civil Liability Provides Better Coverage (Professional Indemnity Insurance)

When purchasing professional indemnity (PI) insurance, one of the most important distinctions to understand is the difference between legal liability and civil liability policy wordings.

These terms define how broadly an insurance policy will respond to claims, impacting the level of protection professionals receive.

Legal Liability Wording

A PI policy with “legal liability” wording generally covers claims that arise due to negligence or breach of duty. This means the policy will respond if a professional’s mistake or omission directly leads to a financial loss suffered by a third party. While this provides essential coverage, it is also relatively narrow in scope.

The limitation of this wording is that it may not cover claims that arise from other civil wrongs, such as breach of contract, libel or intellectual property disputes. If a policyholder faces allegations that do not involve negligence, they may find themselves without insurance protection.

Civil Liability Wording

A civil liability policy, by contrast, is much broader in scope. It covers all forms of civil wrongs unless they are specifically excluded. This means that, in addition to negligence, it extends to claims involving breach of contract (where not excluded), defamation, breach of confidentiality and even some statutory breaches.

Why Civil Liability Cover is Preferable

Opting for a civil liability wording provides professionals with more comprehensive protection. It ensures that they are covered for a wide range of potential legal disputes, not just those related to negligence. Given the increasing complexity of business transactions and legal responsibilities, this broader cover helps safeguard against unforeseen risks. A civil liability policy effectively provides a greater safety net compared with a standard legal liability policy.

Professionals should carefully review policy wordings and, where possible, opt for civil liability coverage to ensure they are protected against the widest range of risks.

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