ALKORA BLOG, LIVE LIABILITY INSURANCE

In the performance of his duties, the engineer may incur errors that give rise to responsibilities with the Administration, resulting in his client or a third party receiving a fine or penalty.

It is important to emphasize that the fines/sanctions themselves lack coverage in the policy, as no harm occurs to a third party, a basic requirement for the coverage provided by professional liability policies to be activated.

Own penalties are not insurable, as it is not a risk that can be transferred to the insurance company.

The Law expressly excludes the insurance of penalties, given that it is forbidden for contracts (in this case, the policy) to contain stipulations contrary to public order. This is because the sanctions are and must be very personal: In other words, they must be fulfilled only by the sanctioned person, and their fulfillment cannot be transferred to a third party. The sanction is imposed for the illegal action of a person and it must be this person who suffers the consequences of his action in order for the sanction in question to fulfill its social function.

That being the case, all professional liability policies, in their different wordings, expressly exclude claims arising from taxes, fines, penalties, punitive damages, exemplary or other non-compensatory damages, of any nature.

Article 73 of the Insurance Contract Law establishes that the Insurer undertakes, within the limits established in the Law and in the contract, to cover the risk of birth at the expense of the insured, of the obligation to compensate a third party for damages caused by an event provided for in the contract, for the consequences of which the insured is civilly responsible, in accordance with law.

Having said the above, what is covered, as we will see below, are the penalties that the Administration imposes on our client or a third party, as a result of an error in our professional performance. That's how things are, the following is a case of an engineer who received a claim after the Administration imposed a penalty on his client as a result of negligence in the latter's professional performance.

We attach a real case of administrative sanction to an engineer who issued a certificate for the installation of an ATM in a shopping center, in accordance with current regulations, who received an administrative sanction.