A key aspect in the long-term success and sustainability of any company is the implementation of insurance policies that provide comprehensive coverage. In this article, we will focus on two specific categories of insurance that can lead to confusion due to serving a similar purpose: professional civil liability insurance and contingency insurance.

Professional civil liability insurance is designed to safeguard professionals and companies against claims arising from errors, negligence, malpractice or omissions in the provision of professional services, especially when they are liable to customers and third parties. In contrast, contingency insurance is aimed at protecting the company in situations where it is required to make good faith judgments, since the law applicable to the specific event is complex and subject to interpretation. This may result in failing to comply with the expected legal treatment, even when relying on the best legal advice. In this context, while professional civil liability insurance is activated in response to claims resulting from errors in professional practice, contingency insurance addresses situations in which the failure to comply with the law stems from the legal interpretation of said law.

In professional civil liability insurance, “professional activity” refers to services provided by the insured to a third party.  “Incorrect act or omission” means any involuntary actual or alleged breach of obligations or duties, or all negligence, errors or omissions, inaccurate or uncertain declarations, or breaches of confidentiality in the exercise of a professional activity.

The main coverages for this type of insurance are:

  • Professional Civil Liability: damage that the insured is legally required to pay as the result of a claim filed against it for an incorrect act or omission by the insured. this type of insurance.
  • Intellectual Property: damage that the insured is legally required to pay as the result of a claim filed against it for an intellectual property infringement by the insured
  • Interference or damage to reputation: damage that the insured is legally required to pay as the result of a claim filed against it for interfering in the privacy or damaging the reputation of a natural or legal person, provided that said interference or damage is unintentional
  • Legal defence:

Contingencies, whether fiscal or legal, can significantly affect a company’s financial health. The insurance specifically designed to address these contingencies offers a significant safety net, both within the framework of an M&A operation and in the company’s day-to-day operations. They protect against potential risks or contingencies identified, providing coverage in situations where doubts arise as to the legal treatment of a specific operation. In this context, the Contingent Solutions team at RibéSalat offer customised solutions to companies that are tailored to the legal complexities of each specific case. In the non-fiscal field, contingency insurance can have very broad applications, covering any risk related to the interpretation of the law (even in the context of litigation), such as labour claims, contractual disputes and breaches of the company’s intellectual property.

In today’s complicated business environment, managing potential contingencies is essential for long-term success. By understanding the different scopes of contingency insurance and civil liability insurance, companies can strengthen their position, mitigate risks and continue forward confidently in the search for growth opportunities. Integrating both insurance solutions, with RibéSalat as a strategic risk management partner, not only protects financial assets, it also safeguards the reputation and stability of companies.

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