A fine line differentiates between act or omission of a torfeasor which could be covered by Professional Indemnify Policy and act or omission that could be covered by Public Liability Policy.
For example, if a pedestrian falls due to a broken pavement – is the Municipality where the pavement is situated covered by its PI Policy or its Public Liability Policy?
To complicate the situation PI policies in Israel are issued on a claims-made basis and PL policies on an occurrence-basis. This means that if an injury occurred back in 2013 and the claim was submitted in 2017, then the question is which policy applies to which year of account is very relevant as different Insures are covering the risks.
Until recently only the Lower Courts (Magistrates Court) dealt with the question as follows:
C.F. 157633/02 Sahar Insurance Co. v. Shenhav Security Company Ltd. (Magistrate Court in Tel Aviv) – a claim was filed against a Security Company and its Third Party Liability insurers. The policy specifically excluded any professional liability of the Insured or any one on its behalf.
The circustances of the loss related to a theft of 2 tractors from a construction site, whilst being guarded by a watchman employed by the Security Company.
The court ruled that as a security company, its main task is to ensure that the premises are guarded. Hence any failure to perform their duties will be regarded as covered under the PI Policy and not the PL Policy.
The court referred to a previous ruling (C.F. 3898/99) – Gerstner v. the Blue Square Supermarket which determined that a slippery floor in the supermarket can trigger a cleaning Company’s PL Policy. The court ruled that a company which provides cleaning services does not require special skills, contrary the duties of a company which provides security services (for which a special license is also required).
The court provided several examples where a security company’s PL policy may apply including fire on a site due to a cigarette butt which was not properly extinguished or bodily/property injuries caused to third parties due to negligent acts of the security guards.
In C.F. 747502/04 Harel Insurance Co. v. Lotan (Magistrates Court of Tel Aviv) the court related to failure of a construction supervisor to supervise the construction work and to make sure that the walkway used by visitors was safe. It determined that such risk should be covered by the PI Policy and not the PL policy as it resulted from the failure to comply with the professional duties of the Insured.
In C.A. 6583/01 the court dealt with a basketball player who was injured during a tournament. The injury was caused whilst playing basketball in one of the local high schools in the city of Holon.
Holon Municipality was found liable for the condition of the basketball court and sought compensation from either its TPL or PI Insurers.
The Court ruled that the liability of the Municipality towards guests who visited its premises is covered by TPL Policy and not PI Policy.
summary, the conclusions of these judgements is that whenever the negligent act or error occurred relates to the specific skills and expertise of the insured, and his ability to carry out his professional duties, then PI policy will apply, subject of course to policy terms and conditions.
However, when the topic is general risks that could have happened regardless of the specific skills of the professional, then the PL policy will apply.
In late 2016 the District Court in Tel Aviv, dealt with this question, adopting the principles as set out above i.e. in the case of C.F. 4783-11-09 Aviram v. The Airports Authority the Court ruled that the Security Company was responsible for responding on site in case of a fire alert, identifying the fire, and calling the Fire Brigade. Its failure to do so in a timely manner led the court to rule that as the failure was a professional one, the relevant PI Policy issued in the year when the claim was submitted should cover the risk.