This is the tale of a well-meaning architect and a surprisingly tenacious septuagenarian. As always, the names have been changed but the rest is all too real.
Unfortunately, professional indemnity claims aren't a fictional villain...
A solid start
Our client is Samantha Davies, an architect of many years' experience. She bought professional indemnity insurance specifically for a contract she was entering into with her client – a sweet old lady we’ll call Mrs Smith.
Mrs Smith was getting on a bit. She wanted an extra ground floor room for when the stairs proved too troublesome. Sam’s job was to design such a space.
Now, as Mrs Smith was a friend of Sam’s mum, Sam had queried the need for professional indemnity insurance when she spoke to us. However, because she's the kind of person who likes to have the t's crossed and i's dotted, she bought a policy anyway. Just in time to start work, in fact.
The job went well. Mrs Smith was delighted with the proposed design. So much so, she asked Sam if she could recommend someone to build it.
As a final favour, Sam arranged for Bricked Up Ltd, a local builder known for speed and value, to give Mrs Smith a quote – which she accepted.
Best-laid plans
Six months later we got a call from Sam. Instead of her usual cheery self, she sounded tense and uncertain. She explained what had happened.
Two months after building work had started, Sam still hadn’t had a penny from Mrs Smith. This was despite countless phone calls and letters.
And then, just as Sam was considering how to get the money she was owed, a letter from Mrs Smith’s solicitor plopped through the door.
The sweet little old lady we knew as Mrs Smith was suing Sam for negligent advice and breaching her duty of care.
Eh? As far as Sam knew, everything was rosy.
What she didn't know was that Bricked Up Ltd, the builder known for speed and value, had been so speedy they hadn’t even finished the foundations before disappearing off the face of the earth.
The extension was left half-built and condemned unsafe. And Mrs Smith was £25,000 out of pocket. She wanted Sam to repay the value of the project, plus an extra £20,000 for the emergency demolition and the inconvenience.
Understandably, Sam was in meltdown.
Good intentions
How could this happen? That small favour had landed her in big trouble is how. Although all she’d done was arrange the builder’s quote for Mrs Smith, she had (innocently) breached her duty of care as a professional by recommending them. Whether she liked it or not, there was a case to answer.
We explained Sam wasn't alone, and that indemnity claims of this kind were by no means unheard of. We also explained that, thankfully, her professional indemnity insurance was there to help.
To say she was relieved was an understatement. With the financial might and legal expertise of her insurer behind her, for the first time in months Sam could see a light at the end of the tunnel.
Negotiations with Mrs Smith’s legal representatives started. And just a few months later, with help from us and the insurer’s appointed solicitor, the claim was settled for £35,000. Sam was delighted with the outcome.
And after that? Well, a few risk management tips, a small change in procedure, and a new perspective on sweet old ladies later, Sam renewed her policy with the same insurer. Safe in the knowledge she'd be protected from indemnity claims like this in the future.
Job done.
Laying the right foundations
When it comes professional indemnity claims, the best way to avoid them is by laying good foundations at the outset.
We saw in this example with Sam that there are a lot of opportunities to improve how she handles risk.
Managing risk in a responsible and methodical way can prevent most indemnity claims. And when a claim does make its way through your risk management safety net, your architects' insurance is there to cover you.
Find out more about how professional indemnity insurance can protect architects. Or you can call the team on 0345 222 5391 if you have any questions about claims or managing your risk.
Image used under license from Shutterstock.
architectsclaimsduty of caremanaging riskprofessional indemnity insurance