PROFESSIONAL INDEMNITY

Key Features of the cover

• Claims made against the Insured arising from breach of professional duty; libel or slander; unintentional infringement of intellectual property rights (many policies limit this cover to copyright only); loss of or damage to documents and dishonesty of employees.
• The legal costs of prosecuting claims for infringement of intellectual property rights (sub-limit £25,000 in the aggregate).
• Legal defence costs (lawyers, court costs, experts etc.) which are payable in addition to the indemnity limit.

Main Exclusions

• Risks that should be insured elsewhere – employers liability, property, land , products.
• North American exposure (we can normally extend the cover on request).
• Seepage and pollution; asbestos and toxic mould.
• War, terrorism & nuclear risks.
• Acts prior to any retroactive date shown.
• The amount of the excess.
• Claims and circumstances known at inception of cover.
• Contractual liability assumed more onerous than any implied duty, trading losses, fines & penalties, insolvency or bankruptcy of the insured.
• Viruses.

Claims Examples Include:

1. • Agent issued volume rights on a book to one publisher. The idea was that there would be a number of follow up books in the series.
   • A few years later TV and motion picture rights were issued to a North American production company including ancillary rights.
   • The book publisher wanted to take advantage of the book's success releasing spin off publications and other merchandising which they felt directly related to the books.
   • The production company took exception and claimed against the book publisher for breach of their rights.
   • It was shown that there was a failure, when negotiating the TV and motion picture contract, to adequately protect the volume rights given initially.
   • We became involved and instigated a meeting between the two parties with a view to negotiating an amicable settlement.
   • An agreement was made between the parties involved. Claim cost: £20,000.
2. • Overseas rights issue.
   • A book in Europe was released whereby the worldwide rights had already been granted to a US company. Whilst litigation was commenced, an amicable settlement was reached between the parties involved. Claim cost £150,000.
3. • A book needed translating for publication overseas.
   • The original book was re worked by the author where many alterations, additions and deletions were incorporated.
   • The agent sent the earlier addition for translation.
   • Claim has been made for the extra cost involved in translating the correct edition. Claim cost: £18,000.
4. • Author decided to publish two books (on a similar subject) very close together using two different publishing houses both under contracts that included a “competing works” clause.
   • Whilst the Insured did not consider itself to be liable, with our assistance we helped diffuse the situation and ultimately no claim arose.
5. • The Insured were involved in difficult negotiations with a publisher.
   • During the conclusion of the negotiations, the Authors Agent sent an email to the publisher referring to the (unsatisfactory) terms it had received and alleged they were worse than any other publisher.
   • In response, the publisher advised it considered the statement was defamatory and instructed solicitors threatening to make a claim in the High Court (the usual forum for libel and slander) unless a full retraction was made.
   • With our Solicitors assistance we assisted the agent in resolving the dispute, incurring defence costs only of £3,000.

Notes:

• Carefully consider existing rights in place and what ongoing plans an existing rights owner has.
• Be wary of contracts with US or Canadian companies. Background checks are worthwhile. Are they connected with the major North American media concerns such as Disney?
• Are lawyers ever used to avoid potential clashes?

Matters where there is no cover under the policy:

1. Where an agent received commissions from the UK publisher in error as the license had expired. The UK publisher made an error but the complaint was made against the Insured agent. The Insured had not been negligent and should refund the amounts paid to them in error.
2. A long and complicated dispute regarding whether the Insured agent should be paying a commission to a sub agent. The author says yes but the Insured says no. This is a contractual dispute and no allegation of negligence has been made against the Insured.

For further information contact Mathew Morrison at PIMS-SCA at mathew@pims-sca.com, or phone 020 7434 3046.  
 

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