By Decree issued on 22.09.2016 and published on 11.10.2016, the Italian Ministry of Justice sets the minimum standards for Compulsory Insurance for Lawyers and professional liability.

The Decree, that will enter into force in October 2017, completes the picture of the compulsory professional indemnity insurance for lawyers introduced by the Law N.137/2012 “New regulation for the legal profession”.

The Scope of Compulsory Insurance for Lawyers

Article 1 of the Decree provides that the Insurance should cover the civil and professional liability for all the damages the lawyers could cause (also due to their gross negligence) to third parties (not only to clients) in the performance of their professional activity. The Insurance should also cover damages due to the employees’ and trainees’ negligence or wrongdoing.

Retroactivity and discovery period

Article 2 of the Decree provides that the Insurance should offer, also in favor of the lawyer’s heirs:

  1. an unlimited retroactivity period;
  2. a 10 years’ discovery period applicable to lawyers who cease their professional activity during the policy validity period.

Exclusion of Insurers’ right of withdrawal

The Policy should expressly exclude the Insurers right of withdrawal after a claim is made or paid.

Policy limits and deductibles

The Ministerial Decree sets the following table providing for the minimum policy limits, based on the previous year turnover and number of professionals involved.

Category Risk Minimum Policy Limit
A Professional activity carried out individually with previous year turnover not exceeding € 30.000,00 € 350.000,00 per claim and in the annual aggregate
B Professional activity carried out individually with previous year turnover above € 30.000,00 but not exceeding € 70.000,00 € 500.000,00 per claim and in the annual aggregate
C Professional activity carried out individually with previous year turnover above € 70.000,00 € 1.000.000,00 per claim and in the annual aggregate
D Associated professional activity carried out by maximum 10 lawyers, with previous year turnover not exceeding € 500.000,00 € 1.000.000,00 per claim and € 2.000.000,00 in the annual aggregate
E Associated professional activity carried out by maximum 10 lawyers, with previous year turnover above € 500.000,00 € 2.000.000,00 per claim and € 4.000.000,00 in the annual aggregate
F Associated professional activity carried out by more than 10 lawyers € 5.000.000,00 per claim and € 10.000.000,00 in the annual aggregate

 

The Decree makes clear that the policy limits should be considered net of the 25% for legal costs as per article 1917 of the Civil Code.

If a deductible is laid down in the policy, in case of a claim, the Insurers should pay the 100% of the loss and recover the deductible from lawyers.

Personal Accidents

Also a personal accident coverage for lawyers, associates, trainees and employees becomes compulsory [1].

The PA Insurance should cover medical costs and accidents occurred during the performance of the professional activity, including accidents occurred during business trips.

The minimum PA policy limits are:

  • Death: € 100.000,00 ;
  • Permanent disability: € 100.000,00;
  • Daily indemnity for temporary disability: € 50,00.

As mentioned, the Ministerial Decree will come into force on the 11th of October 2017 and all of the insurance contracts entered into before such a date must be reviewed to comply with the minimum standards set by the Decree.

 

[1] The Insurance is not compulsory for those employees already covered by the State Insurance provided through INAIL, the National Institute for Insurance against Accidents at Work, a public non-profit entity safeguarding workers against physical injuries and occupational diseases.