Professional Liability Insurance

Abstract

Introduction As a layman to the petroleum engineering field I do not profess to have a complete understanding of the hazards inherent in your work. Likewise, as a layman to the legal profession, I will not attempt to predict trends in the area of Professional Liability litigation. As an insurance Professional Liability litigation. As an insurance broker, however, I can discuss what is RISK, as it is related to Professional Liability; why you, as engineers, can be held accountable for loss sustained by others; and how you can protect yourself and your personal assets through various forms of indemnification and insurance. DUTY = RISK The case law in the United States which defines professional liability is rooted in English common law. an properly understand the origins of this legal concept, it must be well understood that the theory of Negligence is the basis of such liability and has been an accepted legal theory since the Eighteenth Century. A first-year law student learns in his second semester, thanks to his Torts II professor, that a cause of action for Negligence is professor, that a cause of action for Negligence is based on the following elements:A duty, which is an obligation recognized by the law;A failure to conform to a required standard, commonly known as a breach of duty;A reasonably close causal connection between the conduct of the one who owes the duty and the resulting injury; andActual loss or damage resulting to the interests of another. The early English Negligence cases which are the basis of Professional Liability have as defendants people who held themselves out to the public as having special skills in particular fields. The plaintiffs, or injured parties, particular fields. The plaintiffs, or injured parties, in these cases usually were people having direct dealings with the defendants and suffered an alleged damage (usually monetary) because of the negligent act, error or omission of the defendant arising out of their dealings. In every case there existed a direct relationship between the plaintiff and the defendant, a contractural relationship, privity. It is this privity that was the basis for establishing the element of duty in a Negligence cause of action. The American case law on Professional Liability continued this concept of privity up into the Twentieth Century. What this meant was that a professional was immune from suit unless there existed some sort of contractural relationship between the complaining party and himself; and therefore damages were limited to the value of the contract plus limited extra expense. With out this privity a duty could not be established. In other words, an injured third party had no cause of action in Negligence; only those party to the agreement could bring suit. Unfortunately, this is not the legal climate today. Privity is no longer necessary to establish the element of duty in a successful suit couched in the language of Negligence. In 1922 an important case was decided by the Court of Appeals in New York and the opinion written for that Court by Justice Cardozo.