Frequently Asked Questions
- What is the difference in cover between the AFF and the AIIF?
- Am I covered?
- Do I have to pay premiums?
- Why are the deductibles so high?
- Can I insure my deductible?
- Do I pay my deductible of R20 000 to the insurer up front, regardless of what amount is finally paid to the claimant,if any, and does my deductible change depending on the size of the claim?
- I've allowed a client's claim to prescribe. What do I do?
- Does the policy cover all loss/potential loss?
- I am a retired practitioner. Do I have to buy run-off cover?
- What is my limit of indemnity?
- Can I lodge a claim on behalf of my client?
- Am I covered for theft of trust monies?
- I received a letter of Demand on 11 November 2002 and reported the claim immediately. I note that you have registered the matter in the 2002/2003 year and that you have advised me that my deductible is R36 000-00. I am a single practitioner and my deductible should therefore be R20 000-00. Why?
What is the difference in cover between the AFF and the AIIF?
The AFF provides cover for loss arising out of theft, while the AIIF essentially provides cover for loss typically caused as a result of negligence.
The cover provided by the AFF is to members of the public, whereas the AIIF provides an indemnity in the first instance to the practitioner. However, the cover by the AIIF is usually with respect to the claims of clients, so that in effect members of the public ultimately receive the benefit of the indemnity provided.
Do I have to pay premiums?
Currently, no. The professional indemnity cover is arranged by the AFF at no cost to the profession.
The AFF pays a premium to the AIIF in order to obtain the necessary insurance cover on behalf of practitioners. The AFF is itself funded by the interest generated from practitioner's trust accounts.
However, due to the increase in claims and the depletion of funds in the AFF, premiums for the provision of compulsory professional indemnity cover could be levied on practitioners in the not too distant future.
In fact the Attorneys Act has been amended to allow the Fidelity Fund the discretion to levy premiums on the profession (see Judicial Matters Amendment Act of 2002).
Why are the deductibles so high?
This question is answered partly in number 3 above.
In addition, the even higher deductibles for prescribed MVA's, which range from R35 000-00 to R315 000-00 were deemed necessary by reason of the unacceptably high number of MVA claims which prescribed in the hands of practitioners every year.
By the same token, the 15% Prescription Alert loading is applied as explained in 2. above.
Do I pay my deductible of R20 000 to the insurer up front, regardless of what amount is finally paid to the claimant,if any, and does my deductible change depending on the size of the claim?
You only pay your deductible directly to the claimant or his legal representative,once the matter has been settled or a judgement has been obtained against you. If the matter is settled for less than your deductible, then you only pay the settlement amount (and party and party costs to the extent that they fall within your deductible).
Your deductible remains the same regardless of the size of the claim.
I've allowed a client's claim to prescribe. What do I do?
Firstly you should explain the client's rights to him/ her and then refer him/her to other attorneys in order that his/her rights may be protected.
Please note that you should not repudiate liability, negotiate, make any admission, offer, promise or payment in connection with any claim, as by doing so you would be in breach of the policy.
Notify the insurers as soon as you are aware of a claim or potential claim (see Claims Procedure).
Does the policy cover all loss/potential loss?
No. Please see the specific exclusions of the policy in Clause 5.
Practitioners should therefore ensure that they are covered for all areas of work which they undertake
I am a retired practitioner. Do I have to buy run-off cover?
All retired practitioners are covered by the AIIF, for work done whilst they were still practising, regardless on when the claim is made (However, you should check with your broker whether or not you need to purchase run-off cover for your top-up insurance.)
Please also note that the cover can obviously only be provided as long as the current insurance is in place.
Retired practitioners will need to satisfy themselves from time to time that the insurance is indeed still in place, in the same form as it is at present.
What is my limit of indemnity?
Attorneys firms with fewer than 7 partner/directors in terms of the current policy are afforded an aggregate of R1 562 500 unless they have elected to take the reduced indemnity option (see a above). Larger firms having between 7 and 13 partners are entitled to an increased limit on a tiered structure with a maximum aggregate of R3 046 875.
Firms in excess of 14 partners are afforded an aggregate of R 3 125 000.
Practitioners are advised to take out "top-up" cover to ensure that they are covered should they face a claim in excess of their limit of indemnity.
Can I lodge a claim on behalf of my client?
No, third parties do not have any rights in terms of the policy vis a vis the insurers. The client must therefore be referred to independent attorneys in order that his/her interests may be protected.
Am I covered for theft of trust monies?
Attorneys may be under the misapprehension that the Attorneys Fidelity Fund provides fidelity cover to practitioners against theft of trust funds. This is not the case. The intention of the Fund is to serve as a fund of last resort, to protect the public against theft of trust monies by attorneys.
In the event of misappropriation by one of your partners or members of staff, you may well find yourself having to make good the loss. Practitioners are advised to consider seeking cover in the market to protect themselves against such an occurrence.
In addition it must be noted that this cover is different to Fidelity Guarantee cover, which usually forms part of your general short- term insurance cover for your firm.
I received a letter of Demand on 11 November 2002 and reported the claim immediately. I note that you have registered the matter in the 2002/2003 year and that you have advised me that my deductible is R36 000-00. I am a single practitioner and my deductible should therefore be R20 000-00. Why?
There were 2 partners in your practice in 2000, when your client's claim became prescribed. Please note that clause 8.5.1 of the policy states that,
" The deductible is determined by the number of partners or directors of the firm on the date on which the event or occurrence occurred which gives rise to a claim"
The claim has been registered in the year in which the claim against you was first made. See also clause 1.1 of the policy.