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General Business PROFESSIONAL INDEMNITY POLICY The purpose of professional indemnity policy is to protect the professional man against his legal liability to pay damage to the persons who have sustained loss arising from his own professional negligence or that of his employees in the conduct of the business. The policy offers indemnity strictly on a legal liability basis and hence moral liabilities are not covered. SCOPE OF COVER The policy indemnifies the insured against all legal liability in respect of acts of negligence, error or omission, committed in the conduct of the insured’s profession during the period of insurance. EXCLUSIONS The policy excludes liability falling under: i. Public liability ii. Fidelity guarantee iii. The policy express iv. Outside territorial limits if the policy v. Consequential loss vi. War, invasion, hostilities etc. losses The policy conditions are similar to those of public and product liability policies. RATINGS Before a rate is considered for any professional indemnity risk the underwriter must consider: i. Total numbers of person actually engaged in the business (partner and staff) ii. The limit of indemnity selected iii. The numbers of offices and location iv. Claims experience of the insured v. Ages of the partner or experience of the business vi. Ratio of partner to staff SCOPE OF COVER Bond insurance is a financial guarantee that is usually taken by contractors to indemnify their principals (owner of the contract) against any default. It is a stick liability policy. There are various types as stated above. Some of the covers are as follows: a. Advance payment Bond This bond is usually affected by a contractor before any advance payment is made to him by the principal either as mobilization fee or advance payment of the contract value at various stages of the contract work. It guarantees that the amount advanced is utilized for its purpose or be refined if not used. Amount recoverable is the difference between the amount advanced and the contract work already done plus value of material already supplied. b Performance Bond This policy binds the insurer as surety that the physical work as contained in the contract agreement is completed by the contractor according to specifications, and the time specified. If the contractor defaults, the surety pays damages for non-performance or for not completing the contract according to specifications. c. Tender/Bid Bond This is required in connection with submission of tender for contract. The bond guarantees that if the contractor, having been awarded the contract, fails to take up the contract, the insurer (surety) pays for the difference between the contractor’s bid and that of his nearest competitor who will take up the contract thereafter. d. Retention Bond This bond protects the principal against loss of such part of the contract money that should have been retained by him until the completion of the contract and/or the end of the defect liability (maintenance period) but which because of the guarantee given by the insurer (surety) that the contractor would fulfil all the terms of defect liability clause, was paid to the contractor. e. Custom Agent Bond It is usually taken by custom agents and it protects the government against risk of evasion by custom agents of custom duties and taxes. RATING Rating in bonds vary depending on: i. The type of bond requested. ii. Result of the investigation carried out on documents submitted. iii. The bond worderings accepted. iv. The quality of the security/collateral pledged. v. Conditional and unconditional bonds. Bond policies are not renewable and generally have a standard of between 1.00-3.00% except Custom Agent Bonds that are renewable on annual basis and have a flat premium of ₦1,000.00. Rates for credit bonds/credit insurance varies between 3.0% -12.0%. |
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