The best way to show you why having professional indemnity insurance
is worthwhile is to tell you about how it’s helped real people in
real-life situations. In each example, our client didn’t make an obvious
mistake. They were simply doing what they usually do best, trying to
help and act professionally.
Claim 1: Here’s the proof…
Our client, Jim, runs a successful design agency. He had to produce
his biggest client’s annual report – as he had done for 16 years. The
project progressed well. Just one minor thing – the CEO had spotted the
finance director’s name twice in the “With thanks to…” list.
Jim corrected the final proof and sent the document off to print. As
previously, the CEO would visit the printer and check the first sheets
coming off the press to ensure the colours were right, and the images
looked good.
Some days later, as he waited to drop some sample copies off to his
client, Jim realised with dread that the final text changes had not
saved. Jim called his client. Quite reasonably, the CEO wanted his
reports reprinted, but who was going to pay? It was partly the CEO’s
responsibility to sign-off the proofs at the printers.
Faced with a crippling reprint cost, Jim called us to see if his
professional indemnity insurance could help. It could. And soon we
received the information we needed to get the claim started. The only
issue was who would settle the £14,000 reprint bill.
The insurer suggested that the client bore some responsibility, and
between them and us, we negotiated a satisfactory outcome. Within days, a
cheque for £9,000, representing Jim’s agreed liability, was sent. The
client got their corrected report in time for the AGM and Jim kept his
client.
Claim 2: Thankless task
Architectural technician Jane was asked to design an extension for
her mum’s friend who was losing her mobility and needed a ground floor
bedroom adding to her home. Delighted with the plans, the customer asked
if Jane knew of a good builder. She recommended Honest John, a local
tradesman with a good reputation, and her client accepted his quote.
Despite chasing her outstanding design fees, six months later Jane
still hadn’t heard from her client, until a letter from the lady’s
solicitors arrived, detailing a claim for negligent advice and a breach
of duty of care. Honest John had taken payment, started the work, but
then scarpered. The claim was for the £25,000 outlay, plus £20,000 for
remedial works and inconvenience.
Our advice was clear. As a professional making a recommendation, Jane
had a duty of care to make sure her recommendation was sound. Because
her recommendation had run off with her client’s money, there was a case
to answer.
This innocent error was covered by the policy. The insurer negotiated
a settlement of £35,000 with the lady’s solicitors. Jane renewed her
policy – which, despite the claim, went up by less than £10 per month.
Claim 3: Numbers up
Our final tale of woe comes from this client – an accountant, who
explains what it feels like to be on the receiving end of a professional
indemnity claim.
“At first, I was too ashamed to contact my broker. How could I
confess to small errors that resulted in a compensation claim for
£6,000? Thankfully, the broker was sympathetic. They asked for the story
from start to finish, accompanied by copies of letters and emails
communicating with my client. They said they would come back to me once
they had spoken to my insurer.
“When I heard I was covered, I was so relieved. I received guidance
on how to write to my client, requesting details of the charges they had
incurred, so the claim could be assessed properly. The clients had
called in another accountant to correct the issue, and they had charged
extra fees for their time. The insurer proposed a substantially lower
figure than that demanded, and I was shocked when my client agreed to
the offer.
“The process took less than three weeks from my first call to sort
out. I still find it hard to believe I made such a fuss about getting on
the phone to my broker! I had always considered indemnity insurance to
be a bit of a luxury, and I never really appreciated what it could
protect me against – but now I reckon it’s a business essential.”
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