If you are a professional or are providing professional services to your customers then you will no doubt be aware of the need to have adequate professional indemnity insurance in place. This protects you by paying out if you are accused by one of your customers of professional negligence and of having caused them some financial or other loss. It covers any legal fees (yours and your client’s if you lose) and any amount ordered to be paid or agreed to be paid under a settlement.
If professional indemnity insurance isn’t in place it can spell disaster. Few professionals trade as limited companies, so if a successful claim for professional negligence is made then it would be down to you, the professional, to find the money to pay the claim and all the associated legal fees. This could ultimately lead to you having to file for bankruptcy. Even if bankruptcy is avoided, your personal assets including your home are still at risk and may be forced to be sold to pay the money owed. It’s easy to see how valuable professional indemnity insurance is.
However, even having the insurance in place doesn’t take away the worry you’d feel if a customer did accuse you of negligence, and nor does it protect you from all the time you’ll need to dedicate to trying to resolve the problem. If you’re self-employed you could lose valuable income by spending time writing and dealing with correspondence, meeting with your solicitor or going to court.
It’s also pretty hurtful to be accused of professional negligence, since it is your own work and skill that is being called into question (as opposed to, say, a product that you have manufactured). A successful claim can be harmful to your reputation, too, and can cost you future business.
Many professional indemnity insurance policies come with a hefty excess, which you would lose if you had to claim against it, and a successful claim against you would usually lead to higher premiums the following year.
Clients are very savvy these days and if they suffer any kind of loss their first course of action is to try to point the finger of blame at someone else. Even if you have not been negligent at all it can take time, and money, to prove it. And it’s relatively easy to prove negligence – your client has to show that it is more likely than not that you were negligent (this is known as the ‘balance of probabilities’) – but relatively difficult to prove a negative (i.e. that you have not been negligent). These factors, plus the availability of insurance that means that there should be a pot of money to be paid from, increase the likelihood that your client will sue if they feel wronged.
Of course, the answer is to not be negligent in the first place – but that’s easier said than done! You owe a duty of care to your clients, and if you don’t live up to that duty you may have been negligent if you didn’t act as could be expected of a ‘competent professional’ in the same circumstances.
Mediation between parties can often help both parties reach a compromise and is generally cheaper than going down the route of involving courts, but you should always seek legal advice from a reputable solicitor who specialises in professional negligence cases as soon as you receive any communication from a client that they are considering suing you.
DBS Law can provide advice on a broad range of law from, property law, through to personal injury, family law and commercial litigation such as professional negligence or bankruptcy . DBS Law are able to offer you up-to-the-minute legal advice, looking after your needs and being there to support you when you require advice, representation or resolution.
