Professional Indemnity Insurance provides vital
financial protection
for a wide range of professional
advisers and designers. If a
client incurs a
financial loss as the result of alleged neglect,
error
or omission then professional indemnity
insurance will meet the
cost of defending claims
and any damages payable.
Any person who gives advice,
designs or offers similar services in
a professional
capacity will require professional indemnity
insurance. In current times of increased consumer
awareness of
their rights, clients will not
hesitate in pursuing a claim if they feel
that
they have received sub-standard service. The
requirement
for adequate professional indemnity
insurance has, arguably,
never been greater.
Certain professionals (such
as accountants, solicitors and
insurance brokers)
are required by law or the rules of
their professional
bodies to have in place satisfactory
professional
indemnity insurance before they are allowed
to
practice. It may also designate approved
insurers.
Some professional people may
view professional indemnity
insurance as an
expensive and unnecessary overhead,
however,
experience shows that any professional can
produce
substantial claims. Court awards have increased
dramatically in recent years and without insurance,
the
financial security (and indeed the entire
future) of a business
is threatened.
The following
example claims highlight the value of having
adequate professional indemnity insurance in
place:
An accountant failed to
advise in time on a client’s entitlement
to non-domiciled status for their business
interests. A claim was brought for that accountant’s
failure to maximise the available tax benefits.
Invitations to a seminar
were sent out that did not carry the date
that the seminar would take place. The policy
reimbursed the costs incurred for printing
and posting the amended invitations.
An agricultural consultant
made an error in the number of hectares of
land under management when submitting an application
on behalf of a client for an EU subsidy. The
client received a reduced subsidy and claimed
for loss of monies.
A consulting chemist was asked to analyse
the lead content of powered milk. It was alleged
that a negligent analysis led to difficulties
in the product being exported, which caused
financial loss.
An incorrect assessment of a client’s
requirements, particularly with regard to
the timescales and financial imposed by a
contract.
Errors in the production of drawings, schedules
or specifications of materials
A contract was undertaken in which it was
stated that the sound levels in a conference
room could not exceed a specified value to
ensure that any meeting occurring would not
be overheard. When tested, the design failed
to block the sound sufficiently.
An engineer was asked to design a heating
system for a large hotel reception room and
did not consider its size adequately. The
installed radiators did not heat the area
sufficiently and therefore the system had
to be removed and redesigned
A civil engineer involved in the design
of a car park did not make provision for adequate
drainage, causing the car park to flood and
rendering it useless. A claim was brought
for the cost of rectification.
A problem arose with the design of an energy-efficient
house. It failed to achieve the anticipated
cost savings and so a claim was made for the
additional works required to achieve that
original aim.
The family of a deceased person arranged
for jewellery to be worn by the deceased until
the day of the funeral. The jewellery was
not removed by the funeral director before
the cremation, resulting in the jewellery
being incinerated. The family claimed for
the cost of the jewellery.
An IFA advised a client in connection with
the transfer of his pension fund into an income
drawdown scheme, to which the client agreed
but then lost money on the transfer. He claimed
for the amount required to put him back into
the financial position he would have been
in had his funds not be transferred.
An interior designer undertook the design
and decoration of a substantial property that
included a detailed specification of lighting
features. It was alleged that the correct
specification had not been followed and that
the lighting was not of the required standard.
A claim was made for the cost of making good
the lighting installation.
IT consultants installed an integrated computer,
electronics and entertainment system in a
luxury yacht. The design and configuration
of the system created an internet connection
that was open permanently, running up significant
costs as a result.
Errors in the design of a garden led to
problems with a property’s drainage.
A claim was made for the costs of rectifying
the problem.
Loss adjusters investigated a flood damage
claim and authorised the repair works. When
settling the claim, it was discovered that
a previous flooding incident had not been
disclosed. A claim was made by the instructing
insurance company to recover the claims costs
paid under the policy.
A client lost a litigation claim and brought
a further claim against her solicitor for
mishandling the litigation, alleging that
had she been fully aware of her prospects
she would have settled, saving substantial
sums in total costs.
How
Much Professional Indemnity Insurance Cover is Required?
Only the professional can properly assess the
level of cover appropriate to the business,
although the governing body of a profession
may impose requirements as to minimum limits
and terms of cover, and may stipulate an approved
minimum policy wording (scope of cover). In
selecting how much cover to take out, it is
essential that a realistic view be taken of
the potential damages and legal costs that the
business could become liable. It can be almost
as financially disastrous being under-insured
as being without insurance at all.
At Castle Grove we suggest that no professional
indemnity insurance policy be taken out with
a limit of less than £250,000. We will,
however, provide a quotation for lower levels
of indemnity if asked to do so. We are also
able to provide much higher levels of cover.
Any professional with any doubt about the level
of cover they should take out should consult
their legal advisers.
How
can Castle Grove help?
At Castle Grove we can provide professional
indemnity insurance cover for a wide range of
professions from accountants to zoologists and
including more ‘traditional’ professions
such as solicitors, architects, estate agents
financial advisers and surveyors.
Please contact us today to see how we can assist
you with your professional indemnity insurance
requirements or print out our Quotation Request Form, fill it in at your convenience and fax it back to us and we'll obtain a quotation for you.
We can typically arrange professional indemnity insurance for businesses and individuals operating in the following industries, although if your occupation is not listed we may still be able to arrange cover for you. Click on the highlighted occupation for further details.
