Well within living memory, the prevailing cultural approach to mistakes, errors and problems was one of “these things happen” and professional indemnity insurance was far less known about or purchased.
It was accepted that when things went wrong, it wasn’t always possible or productive to try and allocate blame and seek compensation due to perceived negligence.
However, times change.
Today, the United Kingdom is an increasingly litigious society. If you’re a professional providing advice and services to a client, you should be aware that if something goes wrong, they may well sue you for compensation.
Duty of care
Although once seen as being largely something applicable to the domains of the law and medicine, today the concept of “duty of care” is much more widely applied.
It can be seen in numerous professions including;
- IT specialists;
- financial advisors;
- builders and tradespeople
- and of course, the medical and legal professions.
Whilst few if any professionals in these and other related activities would dispute the justice of being held accountable for their professional activities, this change brings with it new personal and financial liabilities. That is why professional indemnity insurance exists.
What liability means
At GSI Insurance, we’re specialists in professional indemnity insurance and space restrictions here don’t permit a fully detailed legal definition. However, you might be sued for compensation if your client believes:
- they have suffered physical injury or related affects, as a result of your professional activities (or in some cases, your failure to perform certain professional activities) broadly described as negligence or a failure in your duty of care obligations;
- they have experienced financial loss or damage to their goods/property, directly or indirectly as a result of your professional negligence or dereliction of your duty of care.
If a court agrees with their perception, then it may award substantial damages against you. In addition to that, you may find that you’re also responsible for paying substantial legal fees.
Professional indemnity insurance exists to help cover some of those potential costs.
The winning your case myth
A common misconception is that if the plaintiff fails to make their case then all your legal costs will be awarded against them.
That is not so. Even if you successfully defend yourself, you might find that you’re still responsible for substantial legal costs in certain circumstances.
Beware of verbal undertakings
While it might be ideal to operate in a “my word is my bond” environment, sadly that’s not often the case in the 21st century.
Your client may have given you certain verbal undertakings that you won’t be held responsible in the event something thing were to happen. Unfortunately, whether they would still adhere to that position should something actually go wrong in your work, is something that you won’t be able to be certain of.
Whilst a verbal contract can be binding in certain circumstances, it is something that can be notoriously difficult to prove under law if tested – unless there are witnesses. Whatever you may think you’ve agreed with a client in advance, you might still be sued under negligence provisions if there is no formal written agreement in place.
A court will then decide based upon its interpretation of your professional duty obligations and again, you might end up with a substantial bill as a result.
Professional negligence insurance might be all that stands between you and financial calamity.
It might be advisable to contact us for further information.