Policy Wording effective 1 July 2023
How is the PI policy structured under the PI Program?
The policy is structured as a single Master Policy that sets out the terms of the insurance which has been agreed between the insurer and AICNSW on behalf of all the licenced conveyancers in New South Wales, along with a Contract of Insurance which includes the full policy terms, conditions and applicable exclusions.
The Master Policy authorises Austbrokers SPT to issue individual Certificates of Insurance to each conveyancing practice which confirms the limit of indemnity, the excess and other important information.
The PI policy wording for the 2023/24 policy period, a sample Certificate of Insurance and a summary of the policy wording changes compared to the 2022/23 policy wording can be found via the following links:
What is the limit of indemnity under the PI Program?
The limit of indemnity applicable to each conveyancing practice is $5m any one claim, during the policy period, after an excess is paid by the practice.
If the $5m limit is exhausted during the policy period by a single or several separate claims, then the limit is reinstated again for another $5m limit to pay for subsequent claims. Therefore, the total aggregate limit for all claims during the policy period is $10m.
If the total amount of compensation and claimant’s costs exceeds the limit of indemnity, then your defence costs are paid in addition to the limit. This is commonly termed a ‘costs exclusive’ or ‘costs in addition’ limit of indemnity.
What is the excess under the PI Program?
a) the standard excess is $5,000 for each claim.
b) however, a higher excess of $10,000 applies where:
i. the practice acts for both the seller and the purchaser, or
ii. where the conveyancing practice has failed to comply with the ‘Failure to Warn Excess’ policy condition for claims that arise from clients being a victim of electronic crime or fraud that result in a loss.
The Failure to Warn Excess policy conditions mandates that a conveyancing practice must provide evidence that they have alerted the client to the risks of electronic crime or fraud and the precautions they should take to minimise the likelihood of being the victim of electronic crime or fraud, by means of:
– information provided in the conveyancer’s costs agreement or other terms of trade that were put before the client; and
– a standardised email signature that was included on the conveyancer’s correspondence with the client,
and this failure caused or contributed to the loss.
c) the excess includes amount paid to the claimant and your own defence costs. This is commonly termed a ‘costs inclusive’ excess.