Many professional indemnity insurance policies contain a Queen’s Counsel Clause, or QC Clause and whilst the clause is not exclusive to professional indemnity policies it is here that the clause is most common usage largely in view of the nature of the professional status of policyholders but what is a Queen’s Council Clause?
When claims are made against policyholders, in all classes of insurance including professional indemnity, the insurance company will assume the control and the handling of the claim. The insurance company will correspond either directly or via their own solicitors with the representatives of the third party and gather the relevant information regarding the case. The insurance company will make the decisions as to whether to proceed with a defence against the claim, a legal defence in court or to settle the matter with the claimant negotiating the best settlement for themselves and indeed their client.
The decision on whether to proceed with a defence or not is largely influenced by the costs that may be incurred by taking either position and the Insurer’s perception of the chance of success.
This decision may of course not be in the general business interests of the policyholder who may feel that damage to their reputation may occur as a result of legal proceedings, yet as the Insurer has control of the claim they are unable to directly influence that decision.
The Queen’s Counsel clause provides that if there is a dispute between the policyholder and the insurance company as to whether a defence should be mounted the papers may be referred to a Barrister who, acting as a arbitrator, must state that the case should be defended and that it stands a reasonable chance of success. If the Barrister does not agree then the insured is not required under the policy clause to proceed with the defence. Whilst the clause does not hand control of the claim back to the policyholder it does provide them with a right to contest proceedings that does not exist in the absence of the clause.
What does the Queen’s Counsel Clause say?
Queen’s Counsel Clause
The Insured shall not be required to contest any legal proceedings unless a Queen’s Counsel (or by mutual agreement between the Insured and the Insurer a similar authority) shall advise that such proceedings could be contested with the probability of success.