Professional Liability Insurance in Switzerland
Professional liability insurance (PLI) covers damage caused to clients or third parties as a result of a professional fault (error, omission, negligence). In Switzerland, several professions have a legal obligation to take out such insurance, while others do so voluntarily as an indispensable protection for their activity. PBM Avocats advises in Geneva and Lausanne on professional liability insurance and disputes with insurers.
Professions with a Legal Obligation to Hold Professional Liability Insurance
| Profession | Legal Basis | Minimum Coverage |
|---|---|---|
| Lawyers | Art. 12 para. 2 LLCA | CHF 1,000,000 (recommended CHF 2-5M) |
| Licensed auditors | Art. 9 RAB/ASR | According to RAB conditions |
| Real estate agents (GE, VD) | Cantonal laws | Varies by canton |
| Insurance brokers | Art. 184 et seq. revised ICA | CHF 1,250,000 per claim |
| Official surveyors | Cantonal laws | Varies by canton |
What Professional Liability Insurance Covers
Professional liability insurance generally covers:
- Bodily injury: physical harm caused to third parties through a professional fault
- Property damage: destruction or deterioration of property belonging to clients or third parties
- Pure financial loss: financial losses without prior bodily injury or property damage (advice error, omission, poor drafting of a contract)
- Legal defence costs: legal fees to defend the professional against third-party claims
Typical Exclusions in Professional Liability Contracts
- Intentional faults and fraudulent acts
- Criminal liability
- Administrative fines and sanctions
- Damage occurring outside the insured territory
- Activities not declared to the insurer
- Claims known before the contract was concluded
The Claims Made Basis: Beware When Changing Insurers
Most professional liability contracts operate on the claims made basis: it is the policy in force at the time the claim is submitted that applies, not the policy in force at the time of the negligent act. This system has several important implications:
- When a contract is terminated, a run-off clause must be negotiated to cover faults committed during the insured period but not yet claimed
- When changing insurers, retroactivity is necessary to cover prior acts
- Liberal professionals who cease their activity must maintain coverage for several years
Professional Liability Claims: Procedure and Obligations
In the event of a claim, the professional must:
- Report the claim immediately to the insurer, as soon as they become aware of a claim or risk of a claim
- Not acknowledge their liability without the insurer's agreement
- Cooperate fully with the insurer in investigating the file
- Keep all relevant documents (client file, correspondence, notes)
The liability insurer takes charge of the professional's defence and, if liability is established, the compensation of the injured third party. In case of disagreement with the insurer regarding coverage, the route of the private insurance ombudsman or the civil court is available.
Which professions have a legal obligation to take out professional liability insurance in Switzerland?
In Swiss law, several professions have a legal obligation to hold professional liability insurance: lawyers (art. 12 LLCA), notaries, doctors (in certain cantons), architects and engineers (according to cantonal regulations), official surveyors, and real estate agents (LIMMOB in certain cantons). The minimum coverage and conditions are defined by the laws of each profession.
What is the difference between professional liability insurance and general liability insurance?
Professional liability insurance (or errors and omissions insurance) covers mistakes made in the exercise of a specific professional activity (medical advice error, legal error, architectural design error). General liability insurance covers damage caused to third parties in the course of the company's general activities (accidents, property damage). Both insurances are often necessary and complementary.
Does my professional liability insurance cover intentional faults?
No. All liability insurance policies exclude intentional faults and fraud. Only unintentional faults (negligence, error of judgment, omission) are covered. If a professional commits an intentional fault (fraud, deception), they are personally liable and their professional liability insurance will not indemnify them. Gross negligence (serious carelessness) may be covered depending on the contract conditions.
What happens if the claim is reported after the expiry of the liability insurance contract?
Most professional liability contracts are concluded on a 'claims made' basis, meaning that it is the policy in force at the time the claim is made, not at the time of the negligent act, that applies. When changing insurers, it is crucial to negotiate a retroactivity clause (backstop) to cover prior acts not yet claimed.
How can I challenge an insurer's refusal to cover a claim under professional liability insurance?
In case of an insurer's refusal, you may first request an internal review, then approach the insurance ombudsman for free mediation. In the absence of a solution, recourse before an ordinary civil court is possible, as liability insurance disputes fall under the ICA (private law) and not social insurance law. A lawyer specialising in private insurance law is essential.