Limit of indemnity as to compensation
18 Limit of indemnity as to compensation
A professional indemnity policy may be subject to a maximum claim limit and a maximum yearly limit.
The maximum claim limit for a professional indemnity policy must not be less than $1,000,000 plus an additional 20% of that limit for relevant expenses.
The maximum yearly limit for a professional indemnity policy issued to an individual must not be less than—
$1,000,000 excluding relevant expenses, or
$2,000,000 including relevant expenses.
The maximum yearly limit for a professional indemnity policy issued to a body corporate must not be less than whichever of the following is the lesser—
$20,000,000,
the maximum yearly limit for a professional indemnity policy issued to an individual multiplied by—
the number of registered directors and registered employees of the body corporate on the date on which the policy is issued, or
if the policy is the fourth or subsequent policy issued to the body corporate, whether by the same or another insurer, the average number of registered directors and registered employees of the body corporate during the previous 3 years.
The maximum yearly limit for a professional indemnity policy issued to a partnership must not be less than whichever of the following is the lesser—
$20,000,000,
the maximum yearly limit for a professional indemnity policy issued to an individual multiplied by—
the number of registered partners and registered employees of the partnership on the date on which the policy is issued, or
if the policy is the fourth or subsequent policy issued to the partnership, whether by the same or another insurer, the average number of registered partners and registered employees of the partnership during the previous 3 years.
For the purposes of this clause—
maximum claim limit means the limit of indemnity for any one claim.
maximum yearly limit means the limit of indemnity for all claims occurring in any one year.
relevant expenses means any amount in respect of the expenses of investigating a claim or the legal expenses of defending or settling a claim, if those expenses are incurred by or on behalf of the insured person.
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