Professional Indemnity for Digital Professions

Duties of the Policyholder (Obligations)

For every insurance contract there are certain “rules of conduct” (also called obligations) that impose certain duties on the policyholder (e.g. in the event of a damage event). You must take these obligations very seriously, as a breach of these obligations can, in extreme cases, result in the loss of insurance coverage.

There are both legal obligations, which are regulated in the Insurance Contract Act (Versicherungsvertragsgesetz), as well as obligations that result from the agreed insurance conditions of your contract. We have summarised the most important obligations for you below.

1.1 Obligations upon Conclusion of the Contract

For an appropriate risk assessment, the insurer relies on your information before the contract is concluded. The Insurance Contract Act and the professional indemnity insurance conditions therefore stipulate that you answer the questions asked in the online application correctly and completely.

1.2 Consequences of Non-compliance with the Obligations when Concluding the Contract

If the obligation to report circumstances relevant to the risk is violated (at incorrect or incomplete answers in the online application), the insurer can withdraw from the contract and, in the event of a claim, be wholly or partially exempt from payment. For co-insured parties, the policyholder’s reporting obligations and the legal consequences of their violation apply accordingly.

2.1 Obligations to be Observed during the Term of the Contract

You are also subject to obligations during the term of the contract. For example, in accordance with the professional indemnity insurance conditions, you are obligated, upon request by, to report changes to the insured risks and the annual turnover minus VAT tax electronically via the online annual report (change notification).

If you fail to report the change in good time, the insurer is entitled, instead of a specific premium adjustment, to demand the premium that would have to be paid for the next higher turnover level of the online rate. This does not apply if you make up the annual report within one month of receiving the request for additional payment.

2.2 Consequences of Non-compliance with the Obligations During the Term of the Contract

Here, too, a grossly culpable breach can entitle the insurer to terminate the contract and can lead to complete or partial exemption from performance.

3.1 Obligations when Reporting a Damage Event is also dependent on your cooperation when an insured event occurs. According to the Insurance Contract Act (in connection with the professional indemnity insurance conditions), you must therefore report the occurrence of the insured event to the insurer or in writing (also by email) within 3 days of becoming aware of it.

According to the Insurance Contract Act (in connection with the professional indemnity insurance conditions), the following notification and cooperation obligations must be observed after the occurrence of the insured event:

The policyholder must immediately report the following after becoming aware:

  • judicial or investigative proceedings directed against the policyholder
  • a payment order, arrest or penalty order
  • a court notice, injunction or application for legal aid by the claimant
  • an independent evidence procedure

Following the insurer’s instructions

The policyholder is obliged, following the instructions of the insurer, to prevent and mitigate the damage as far as possible and to do everything that serves to clarify the insured event, provided that the policyholder not expected to do anything unreasonable.

The policyholder must support the insurer in the defence against the damage as well as in the damage investigation and settlement, report in detail and truthfully, communicate all facts concerning the insured event and the consequences of the loss and send all documents which, in the insurer’s opinion, are relevant for the assessment of the insured event.

3.2 Consequences of Non-observance of the Obligations in the Event of Damage

If any of the obligations is violated, the insurer can be released from the obligation to perform provided the legal requirements are met, unless the violation is based neither on malice aforethought nor gross negligence.