If you are going to sign a contract to provide services to your clients, they may have determined that you need a minimum level of professional compensation insurance. This cover protects your business from accusations of professional negligence from your clients – but what exactly is professional negligence?
Every professional owes a duty of care to their clients and is expected to offer their services to a high standard with reasonable skills and care.
So, when a professional fails to meet the standards expected of them – or is deemed having failed to meet them by the client – claims for professional negligence may emerge.
The 1982 Goods Supply Act implies the terms in a contract, that professionals will perform services with reasonable care and attention, which means that there does not need to be a special clause in the contract stating the expected level of service. In reality, though it is highly advisable to clearly define the duties and expectations of each party in the contract, thereby limiting the possibility of ambiguity.
Naturally, there are too many scenarios that can cause professional negligence claims to list them all here, but the snippet of the claim we saw is below: –
Fail to complete the project on time or as agreed;
Bad business strategy recommendations;
Breach of confidentiality or copyright;
Accidental loss of documents and / or data;
Alleged or slanderous commentary;
Errors in designs made by policyholders.
Examples of professional negligence claims
An IT system is required for new clients. The terms and responsibilities are agreed upon, which is then finally fulfilled by an IT consultant. However, their client decides that the new system isn’t running fast enough and claims that policyholders are being professionally neglected. Solicitors can help in this scenario, offering guidance to contractors, analysing documentation to help them prove that not only all the agreed project requirements and objectives have been met, but most of the performance problems are caused by hardware (supplied by other professionals) rather than software, for example. For advice with any similar scenario, consider Solicitors Huddersfield like https://bridgelawsolicitors.co.uk/services-for-individuals/family-law/holmfirth-huddersfield-family/
Professional negligence claims
As the above example shows, professional negligence claims can occur even when you have carried out your duties to to the highest of your ability, and most likely from situations that are entirely out of your control. Even if you don’t make mistakes and you feel your client’s claims are speculative, you will be charged legal fees just to defend your claim to prove that you didn’t act recklessly. The point to take from this is that even the most experienced and careful professionals must consider professional compensation insurance to protect themselves.
What about the negligence claim about the director?
While professional compensation insurance guards against professional negligence claims, legal proceedings are increasingly being sought against individual company directors who have provided services. In this case, you should consider arranging separate coverages known as directors and insurance officers. This includes various scenarios; from legal costs and damages for which actionable mistakes have been made, to paying legal representation at the policy station in the event of an adverse event from the arrest of the director or officer.