Professional Indemnity FAQ

Continuous Cover Extensions - When do they apply?

What is "continuous cover"? When do we offer this?

Many insurers are under the impression that this is some sort of loyalty bonus. Well this is not really true. There is however an advantage to stay with the current insurer and that is due to the situation of a known circumstance.

It means that if someone who was insured with us in unbroken successive periods notifies a claim circumstance in the subsequent period which should have been notified in the earlier period, then that claim will be covered under the latter policy but there remains conjecture amongst many insurers. Is it subject to the lesser limit of the two applicable policies. Or is it the policy that it should have been reported in? Issues of 'non-disclosure' and 'known circumstances' exclusions will not be raised simply because an insured does not need to disclose matters that ought to be of common knowledge, however prejudice due to delayed notification may be taken into account in the adjustment of the claim.

Then we have the added situation of having clauses found in the some wordings saying that if in the third year the insured then goes to a different insurer, that allowance for the known circumstance will be void. This applies even if the insurer decides to decline to offer renewal. There is some legislation that may be tested on this. There are also some insurers now giving continuous cover if the insured was with a different insurer the year before. A brilliant marketing move.

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Illegal or unsuitable cladding now a big issue

Why we have laws, regulations and Australian standards? Because some people just do the wrong thing all for the sake of making money. The cladding issue is the subject of 4 Corners program on the ABC.

We are already seeing Insurance policies now placing exclusion endorsements into their policies excluding and claims relating to illegal cladding. We are seeing Governments demanding Audits of all existing buildings above a certain height. There are accusations of Builders taking other short cuts such as on Wiring, Pipes and sprinkler systems. 

The question is, who is to blame? Who will take responsibility?

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Small business in NSW

Right after the NSW Government have reimposed Fire Service Levies, they have at least made an effort for small business. The government has announced it will abolish stamp duty on a number of policies taken out by a small business. This is an important change.

What is a small business? In order to gain the exemptions, the business must be a small business for Capital Gains Tax Purposes for the income year in which the insurance is effected or renewed. A small business for CGT purposes is: “an individual, partnership, company or trust that is carrying on a business, and has an aggregated turnover of less than $2 million.”

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