In the field of professional liability , errors or omissions in the exercise of a profession can cause various types of damages to third parties. One of the key concepts in this type of insurance is that of primary property damage , which refers to economic losses suffered by clients or other third parties without prior material or personal injury.

Unlike economic damages arising from physical or material damages, primary patrimonial damages directly affect the assets of the affected person due to incorrect professional conduct.

In this article, we will explain in detail what primary property damages are, how they differ from other types of damages, and in what cases they can be covered through a professional liability insurance policy.

What is meant by primary property damage?

Primary patrimonial damages are the direct economic losses suffered by a third party due to an error, fault or professional negligence , without there being a prior material or personal damage.

These are losses to the affected party's assets as a result of non-compliance or poor performance of the contracted professional services.

Example: A financial advisor recommends an erroneous investment that causes financial losses to his client. Although there is no physical or material damage, there is direct financial loss, which constitutes primary financial damage.

Differences between primary property damage and derived economic damage

To better understand primary patrimonial damages, it is important to differentiate them from the resulting economic losses.

Both may be covered by a professional liability insurance policy , but it is essential to know the specific conditions of the contract.

Examples of primary property damage in different professions

1. Lawyers and legal advisors

If a lawyer makes a mistake in handling a case and this causes his client to lose a trial, the consequence is direct financial damage. Example: A lawyer does not file an appeal within the legal deadline, which prevents his client from appealing a financial penalty.

2. Consultants and auditors

Errors in financial reporting can result in significant losses for businesses and individuals. Example: An auditor fails to detect errors in a company's accounting and the company files incorrect tax returns, resulting in a fine.

3. Tax and accounting advisors

An error in tax management can lead to penalties and financial losses for clients. Example: A tax advisor files a tax return late, which generates interest and penalties for his client.

4. Insurance mediators

A failure to manage an insurance policy can leave a client without coverage in the event of a claim. Example: An insurance broker fails to renew a liability policy on time and his client receives a claim when he is no longer insured.

5. Engineers and architects

An error in the design of a project can cause delays and additional costs on a project. Example: An architect designs a structure with incorrect calculations and the work must be stopped to make modifications.

6. Technology sector professionals

Software development or system implementation can lead to financial losses if not done correctly. Example: A software development company delivers a platform with errors that prevent an e-commerce business from working properly, leading to sales losses.

How are primary property damages covered by professional liability insurance?

Professional liability insurance policies usually include coverage for primary property damage, but it is essential to review the terms of the contract.

For insurance to cover this type of damage, the following requirements must generally be met:

1. That the primary property damage is a consequence of a professional error.
2. That the injured party is a third party, such as a client or supplier.
3. That the claim is made within the policy coverage period.

In some cases, insurers may include deductibles or limitations in the coverage of these damages, so it is advisable to seek advice before taking out the policy.

Why take out professional liability insurance with primary property damage coverage?

A professional error can generate high financial claims, putting the insured's assets at risk. Some reasons for having this coverage are:

1. Financial protection: It covers compensations that can be significant.
2. Legal security: Includes legal defense against claims.
3. Normative compliance: In some professions, it is mandatory to have liability insurance.
4. Confidence for customers: Adequate insurance provides greater security and professionalism.

Taking out insurance with primary property damage coverage allows you to carry out your professional activity with peace of mind, minimizing economic risks in the event of possible claims.

Tips for choosing the best professional liability policy

If you are looking to take out insurance that covers primary property damage, keep the following aspects in mind:

1. Verify that the policy expressly includes coverage for primary property damage.
2. Check the compensation limits and make sure they are appropriate to your professional activity.
3. Check if there are any deductibles or exclusions that may affect coverage.
4. Make sure the policy includes legal defense in case of claims.
5. Consult with insurance experts to get the best option according to your profession.

At Canarisk , we help you find the most suitable professional liability insurance for your business, ensuring that you are protected against claims for primary property damage.

Primary property damage represents a significant risk for many professionals, as it can generate financial claims without any physical or material damage.

Having professional liability insurance that covers this type of damage is essential to protect the insured's assets and reputation.

At Canarisk , we specialize in insurance for professionals. If you need advice on choosing the best policy, contact us and request a personalized, no-obligation consultation.