If you’re in the business of providing advice, guidance, or services to your clients, you regularly expose yourself to professional liability risk. This is where your client suffers a financial loss because the advice you have given them, or service that you have provided to them, has been incomplete, incorrect, ambiguous, or not fit for purpose. They then take legal action against you compensate them for the loss incurred. Whether their claim is justified or not, you’re faced with the cost of defending yourself in court and any settlements you are ordered to pay them.
Here are some examples of professional liability:
- An accountant makes an error when doing a business’s tax return, resulting in their client being slapped with hefty IRD penalties.
- An architect recommends a certain type of cladding for a building, which turns out to be unsuitable, requiring the entire building to be re-clad.
- A web designer uses unlicensed stock photography on a company’s website, resulting in the company being sued by the owner of the images.
- A real estate agent sells a property to a couple, who later discover their boundary is not where the agent had told them it was, making their property smaller than they thought and therefore worth less than they paid.
Professional Indemnity insurance provides you with financial protection if this situation occurs. Within the claim limits stated in the policy document, Professional Indemnity insurance covers your legal costs so you can mount your best possible defence. In the event you are found to be at fault, it also covers reparations that you are ordered to pay to your client.
Professions that would benefit from Professional Indemnity insurance include:
- Financial advisers
- IT consultants
- Project managers
- Real estate agents
If you don’t have Professional Indemnity insurance, or you are concerned that your current cover is inadequate, contact our team today to discuss your requirements.