There is a fine line between whether the act or omission of a tortfeasor is covered by a professional indemnity or 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 professional indemnity or public liability policy?
To complicate the situation in Israel, professional indemnity policies are issued on a claims-made basis and public liability policies on an occurrence basis. This means that if an injury occurred in 2013 and the claim was submitted in 2017, the question would be which policy applies to which year, as different insurers cover different risks.
The lower courts (Tel Aviv Magistrates Court) recently addressed these matters.
In Sahar Insurance Co v Shenhav Security Company Ltd (Tel Aviv Magistrates Court, CF 157633/02) a claim was filed against a security company and its third-party liability insurers. The policy specifically excluded the insured and any party acting on its behalf from professional liability.
The loss concerned the theft of two tractors from a construction site which were being guarded by a security guard employed by the security company. The court ruled that the security company's main task was to ensure that the premises were guarded. Hence, any failure to perform its duties would be covered under the professional indemnity and not the public liability policy.
The court referred to a previous ruling – Gerstner v the Blue Square Supermarket (CF 3898/99) – which determined that a slippery floor in a supermarket had triggered a cleaning company's public liability policy. The court ruled that a company which provides cleaning services does not require special skills in contrast with the duties of a company that provides security services (for which a special licence is required).
The court provided several examples in which a security company's public liability policy could apply, including a fire on a site due to a cigarette which was not properly extinguished or bodily or property injuries caused to third parties due to negligent acts by security guards.
Harel Insurance Co v Lotan (Tel Aviv Magistrates Court, CF 747502/04) concerned a construction supervisor's failure to supervise construction work and ensure that the walkway used by visitors was safe. It determined that such a risk should be covered by a professional indemnity and not a public liability policy, as the accident had been caused by the insured's failure to fulfil its professional duties.
In CA 6583/01 the court dealt with a basketball player who had been injured during a basketball tournament at a local high school in the city of Holon. The Holon municipality was found liable for the condition of the basketball court and sought compensation from either its public liability or professional indemnity insurers. The court ruled that the municipality's liability towards guests who visited its premises was covered by its public liability and not its professional indemnity policy.
When a negligent act or error concerns an insured's specific skills and expertise and his or her ability to carry out his or her professional duties, a professional indemnity policy will apply, subject to terms and conditions.
However, for general risks that could have happened regardless of the insured's specific skills, a public liability policy will apply.
In late 2016 the Tel Aviv District Court considered this question, adopting the principles set out above in Aviram v The Airports Authority (CF 4783-11-09), and ruled that, in the case of a fire alert, the security company was responsible for responding on site, 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 had been a professional failure, the relevant professional indemnity policy issued in the year when the claim was submitted should cover the risk.
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For further information on this topic please contact Sharon Shefer at Levitan, Sharon & Co by telephone (+972 3 688 6768) or email ([email protected]). The Levitan, Sharon & Co website can be accessed at www.israelinsurancelaw.com.