We’re going to assume that you already know a bit about professional indemnity (PI) insurance. If you don’t, no problem, have a read of our guide to PI. It’ll help get you up to speed.
Now, we know that PI insurance helps protect your business if a client alleges you’ve been negligent and made a mistake. Or if they say you haven't done your job to the expected standard.
To illustrate how, we’re going to give you some real-life professional indemnity claim examples.
Specific claims vary by industry so it’s difficult to cover everything here. For example, architects don’t face exactly the same risks as accountants.
Nevertheless, it’s important to take on board that all professionals have a duty of care to their clients when they undertake work for them. It’s a breach of that duty of care that usually results in a claim.
Negligence
It's a broad term and it covers a whole range of possible circumstances. It certainly doesn't need to be deliberate or even obvious.
But that’s why you bought PI cover in the first place. Because you just never know, right?
Any professional can be accused of negligence. If someone does sue you, regardless of whether the claim is valid or not, you'll still have to do something about it.
That's where your professional indemnity insurance helps, by picking up the tab for legal costs and any compensation you owe. Your policy should also cover claims involving infringement of intellectual property rights and defamation.
Real-life professional indemnity claims examples
As promised, here are some actual professional indemnity claims examples (of various types) we've dealt with, made against actual clients (of various types). All of these can be considered as negligence:
- Architect sued by his client for the costs of rectifying an extension built from a flawed design. Insurer paid £22,500.
- Logistics company sued by a competitor for copyright infringement and intellectual property theft relating to their business model and their website. Insurer paid £170,000.
- Web designer’s client sued by image owners for using unlicensed pictures on his website. Client sued the web designer. Insurer paid £9,000.
- IT consultancy’s web hosting partner company hacked – consultancy’s clients’ websites offline for a day. Consultancy sued for loss of business by a client. Insurer paid £3,200. (Thank goodness it didn't go on for longer.)
- Marketing agency omitted a digit from a client’s phone number and left out their web address in a printed advert. Commercial decision made to reprint advert at agency’s cost. Insurer paid £21,995.
Makes you think, doesn’t it?
What’s clear from this quick run-down alone is that professional indemnity insurance claims come in all shapes and sizes. And cost a lot of money - not forgetting that the sums involved get more eye-watering by the year.
Mistakes happen no matter how careful you are...or think you are. Anticipating them isn’t easy (you wouldn’t need professional indemnity if it was) but, thankfully, protecting yourself is.
See just how easy we mean by clicking on the link to find out more about professional indemnity insurance and to get a quote. Or call the team on 0345 222 5391.
Image used under license from Shutterstock.
accountantsarchitectsclaimsinsurance explained