When you’re in the business of providing professional advice, sometimes, things don’t go according to plan. Whether it’s a small oversight on your part, misplacing a document, or making a mistake – there are many instances that can lead to a client taking legal action against you. You might hold Professional Indemnity insurance to cover such claims, but it is also worth understanding some of the different events that can give rise to these types of claims for a well-rounded approach to managing your risk. Here are some examples of events which may lead to Professional Indemnity claims, and how you can make sure you’re staying vigilant.
Professional Indemnity claims can arise specifically from negligence. This means as a professional you have breached your duty of care in some aspect of your work which has resulted in incorrect or misleading advice being provided. Examples might include making an incorrect calculation, or failing to examine a client’s history thoroughly.
Negligence can also be a risk in the course of changing work patterns brought about by COVID-19. If staff members are working remotely, there are some professions where closer attention quality checking may be required to ensure quality of advice and service is being maintained.
Loss of Documentation
Sometimes professional negligence claims can arise as a result of you misplacing or losing documentation. This can also include filing documents under the wrong client name leading to a claim for compensation.
Misplacing documents can not only impact your professional advice or service but may also lead to a privacy breach if you lose confidential documents, or leave them in a public place.
It’s easy to think that this is not applicable given the digital world we operate in today, but it also applies in digital settings – all it takes is accidentally deleting an email; saving a document in the wrong folder, or sending an email to the wrong client.
This can occur where you provide information professional advice to a client that is incorrectly interpreted and the client makes a decision based on your professional advice that ends up costing them financially.
For example, an accountant provided a service to a high-wealth client and his companies, but the client sued the accountant for misleading conduct relating to unauthorised commissions, withdrawals and account discrepancies.
This can also be a potential risk if your business advertises its professional services on any external platforms. When you advertise your business, it is important to avoid making unrealistic claims, or giving guarantees to clients as these can be the cause of professional indemnity claims later on.
Incorrect professional advice can be provided either as a result of negligence, or can result from an honest mistake from your part. If you provide incorrect professional advice to a client, and your client suffers a loss, your client may have a right to take legal action against you.
Intellectual property infringement
While this is by no means a new phenomena, it is even more of a prominent risk in today’s digital age. Intellectual Property infringements can take the form of violation of IP rights, copyrights patents, trademarks, industrial designs, and trade secrets.
Sometimes clients are near impossible to please, and while you may not have breached your duty of care to the client or made a mistake, a client may allege that you have done so. Even if a claim made against you has no basis, a professional indemnity insurance policy can assist by providing defence costs for claims covered by a policy. This can include appropriate legal representation or expert assistance.
Professional Indemnity Insurance
As you can see, there are a number of factors that can lead to Professional Indemnity claims. It’s also important to note that many PI claims can occur due to a combination of the above factors, not necessarily a single reason. Reasons for PI claims can also vary based on your industry or profession. Therefore, when it comes to selecting your Professional Indemnity Insurance provider, it’s worth choosing a broker that has a detailed understanding of your industry. By arranging your PI Insurance through a broker, you can be confident that if you need to make a claim, you’ll have the support through the claims process.