PROFESSIONAL INSURANCE PORTFOLIO - PI SP Portfolio (2)

The General Terms and Conditions and the following terms and conditions all apply

to this section.

The activities shown in the schedule, which you perform in

the course of your business.

Costs incurred with our prior written agreement to

investigate, settle or defend a claim against you.

Also includes any person who was, is or during the period of

insurance becomes your partner or director or senior

manager in actual control of your operations.

If during the period of insurance, and as a result of your business activity within

the geographical limits for clients, any party brings a claim against you for:

a.

negligence or breach of a duty of care,

b.

negligent misstatement or negligent misrepresentation,

c.

infringement of intellectual property rights including copyright, patent,

trademark or moral rights or any act of passing-off,

d.

breach of confidence or misuse of any information, which is either confidential

or subject to statutory restrictions on its use,

e.

defamation,

f.

dishonesty of your individual partners, directors, employees or self-employed

freelancers directly contracted to you and under your supervision,

g.

any other civil liability unless excluded under WHAT IS NOT COVERED below,

we will indemnify you against the sums you have to pay as compensation.

We will also pay defence costs but we will not pay costs for any part of a claim not

covered by this section.

If your client has reasonable grounds for being dissatisfied with the work you have

done, refuses to pay for any or all of it, including amounts you legally owe to

subcontractors at the date of the refusal, and threatens to bring a claim against you

for more than the amount owed, it may be possible to settle the dispute with the client

by your agreeing not to press for the disputed amount. If so, we will pay you the

amount owed to you at that time if we believe that this will avoid a legitimate claim for

a greater amount and we have given our prior written approval to settling in this way

and for this amount.

PROFESSIONAL INSURANCE PORTFOLIO - PI SP Portfolio (2)

Alternatively, if it is not possible to reach agreement with the client on this basis but

we still believe that by not pressing for the disputed amount you will avoid a

legitimate claim or counterclaim for a greater amount, we will pay the amount owed

to you at that time. If a claim is still brought, we will deal with it but our total

payment, including what we have already paid you or on your behalf, will not exceed

the applicable limit of indemnity shown in the schedule. You must return the amount

we have paid if you eventually recover the debt less your reasonable expenses.

Once we agree to make this payment you will assign to us such rights as you have

in relation to the amounts owed to you.

We will not make any payment for any part of a claim not covered by this section.

If during the period of insurance, and in the performance of your business activity

within the geographical limits, you suffer a loss from the dishonesty of your

employees or self-employed freelancers directly contracted to you and under your

supervision, where there was a clear intention to cause you loss or damage and to

obtain a personal financial gain over and above any salary, bonus or commission, we

will indemnify you against your direct financial loss.

We will not make any payment for any claim or loss directly or indirectly due

to:

1.

any investment of, or direct advice on the investment of, client funds.

2.

any survey or valuation of physical property or any construction or erection

work, other than heating, lighting, electrical, venting and other work normally

undertaken by a Building Services Engineer.

3.

your operation or administration of any pension or employee benefit scheme or

trust fund, or the sale or purchase of or dealing in any stocks, shares or

securities or the misuse of any information relating to them, or your breach of

any legislation or regulation related to these activities.

4.

your breach of any taxation, competition, restraint of trade or anti-trust

legislation or regulation.

5.

any pollution or contamination, including noise, electromagnetic fields, radiation

and radio waves.

6.

the work of any personnel supplied by you to a client, unless you have

breached a duty of care in supplying them.

7.

transmission of a computer virus.

8.

your liability under any contract which is greater than the liability you would

have at law without the contract.

9.

the death or any bodily or mental injury or disease suffered by anyone, unless

arising directly from your breach of a duty of care in the performance of a

business activity.

PROFESSIONAL INSURANCE PORTFOLIO - PI SP Portfolio (2)

10. anyone's employment with or work for you, or any breach of an obligation

owed by you as an employer or any kind of discrimination, harassment or

unfair treatment.

11. the ownership, possession or use of any land or building, any animal, any

aircraft, watercraft or any motor vehicle.

12. the loss, damage or destruction of any tangible property, unless arising directly

from your breach of a duty of care in the performance of a business activity.

13. the loss, damage or destruction of any bearer bonds, coupons, share

certificates, stamps, money or other negotiable paper.

14. any personal liability incurred by a director or officer of yours when acting in

that capacity or managing your business, or your breach of any fiduciary duty,

other than when performing a business activity for a client, or any statement,

representation or information concerning you or your business contained in

your accounts, reports or financial statements.

15. your supply, manufacture, sale, installation or maintenance of any product.

16. any statement you knew, or ought reasonably to have known, was defamatory

at the time of publication.

17. any act, breach, omission or infringement you deliberately, spitefully,

dishonestly or recklessly commit, condone or ignore. This does not apply to any

claim or your own loss under the dishonesty cover in WHAT IS COVERED, but

we will not in any event provide cover to any party who actually commits,

condones or ignores any dishonesty.

18. any shortcoming in your work or your own loss which you knew about, or

ought reasonably to have known about, before we agreed to insure you.

19. date recognition.

20. war, terrorism or nuclear risks.

21. asbestos risks.

We will not make any payment for:

1.

any claim brought by an insured within the definition of you or any party with a

financial, executive or managerial interest in you, including any parent company

or any party in which you have a financial, executive or managerial interest,

including any subsidiary company. This does not apply to a claim based on a

liability to an independent third party directly arising out of the performance of

your business activity.

2.

that part of any claim where your right of recovery is restricted by any

contract.

3.

your lost profit, mark-up or liability for VAT or its equivalent.

4.

any trading loss or trading liability including those arising from the loss of any

client, account or business.

PROFESSIONAL INSURANCE PORTFOLIO - PI SP Portfolio (2)

5.

fines and contractual penalties, aggravated, punitive or exemplary damages,

and also additional damages under section 97(2) of the Copyright, Designs

and Patents Act 1988 or any statutory successor to that section.

6.

any claim, including arbitration, brought outside the countries set out in the

schedule under Applicable Courts.

This applies to proceedings in the applicable courts to enforce, or which are

based on, a judgment or award from outside the applicable courts.

We will pay up to the limit of indemnity shown in the schedule unless limited below.

We will also pay for defence costs. However, if a payment greater than the limit of

indemnity has to be made for a claim our liability for defence costs will be limited to

the same proportion that the limit of indemnity bears to the amount paid. You must

pay the relevant excess shown in the schedule.

When we settle your own losses from dishonesty, we will deduct any sums you owe

or the value of any property you hold belonging to the perpetrator.

All claims and losses which arise from the same original cause, a single source or a

repeated or continuing shortcoming in your work will be regarded as one claim. This

includes such claims and losses arising after, as well as during, the period of

insurance.

For claims and your own losses arising from dishonesty and from the physical loss

or destruction of or damage to tangible property and from the death, disease or

bodily or mental injury of anyone, the most we will pay is a single limit of indemnity

for the total of all such claims, their defence costs and your own losses. You must

pay the relevant excess shown in the schedule.

At any stage of a claim we can pay you the applicable limit of indemnity or what

remains after any earlier payment from that limit. We will pay defence costs already

incurred at the date of our payment. We will then have no further liability for that

claim or its defence costs.

We will not make any payment under this section:

1.

unless you notify us promptly of the following within the period of insurance

or at the latest within 14 days after it expires for any problem you first become

aware of in the seven days before expiry:

a.

your first awareness of a shortcoming in your work for a client which is

likely to lead to a claim against you. This includes any criticism of your

work even though regarded by you as unjustifiable.

If we accept your notification we will regard any subsequent claim as

notified to this insurance.

PROFESSIONAL INSURANCE PORTFOLIO - PI SP Portfolio (2)

b.

any claim or threatened claim against you.

c.

your discovery, or the existence of reasonable grounds for your

suspicion, that any partner, director, employee or self-employed

freelancer has acted dishonestly.

2.

if, when dealing with your client or a third party, you admit that you are liable

for what has happened or make any offer, deal or payment, unless you have

our prior written agreement. You must also not reveal the amount of cover

available under this insurance, unless you had to give these details in

negotiating a contract with your client or have our prior written agreement.

We have the right, but not the obligation, to take control of and conduct in your

name, the investigation, settlement or defence of any claim. If we think it necessary

we will appoint an adjuster, solicitor or any other appropriate person to deal with the

claim. We may appoint your own solicitor but on a similar fee basis as our solicitor

and only for work done with our prior written approval. Proceedings will only be

defended if there is a reasonable prospect of success and taking into account the

commercial considerations of the costs of defence.