No matter how well you run your business, there is a good chance that at some stage one or more of your clients will claim you have made an error and expect “compensation for damages” as a result.
It is for this reason you have taken out Professional Indemnity Insurance. However, the policy in general terms, only responds to cover the legal defence costs, as pre-approved by the Insurer, and any loss that you may suffer arising from a legal liability to pay compensation for damages for a breach of your professional duty of care to a Client or any other third party.
In many cases we have seen, a loss may appear to have been suffered by a Client or other third party, however, it has not necessarily been caused as a result of your negligence.
If you make an error that could lead to a possible Claim, or if the Client or any other party indicates in some way that they may make a Claim against you, then DO:
(a) Immediately you become aware that a Claim is or could be made against you, contact your broker. They will send you a claim notification form. Insurers may require the completed forms and further background information before they are able to advise you on the next steps to be taken.
(b) In the meantime, if possible act in a co-operative manner in respect of the possible claimant and encourage them to take steps to minimise the likelihood of their loss compounding. If pressed regarding the problem what you can say is that “I am taking advice on the matter”.
(c) Before responding verbally or in writing to the claimant, forward a draft of your intended response to your broker, who will refer it to the Insurer for approval. Any required amendments to the draft will be sent back to you, and then a formal response may be sent to the claimant.
(d) Upon receiving a further reply from the claimant, pass this on immediately to your broker for guidance. If considered necessary a lawyer will be instructed by your Insurers to assist.
Importantly, here are the DON’TS in respect of claims or potential claims:
(i) Don’t bury your head in the sand and hope the problem will go away by itself.
(ii) Don’t admit liability at any stage. This may invalidate your insurance cover.
(iii) Don’t say “I’ll refer the matter to my insurer”, or “take it up with my insurer”. Don’t, if possible, disclose that you have an insurance policy.
(iv) Don’t let your pride or emotions get in the way of using sound judgement should a Claim arise. It can happen to anyone!
LPMS guides their members to minimise the potential for such claims, however when claims do occur we provide assistance to help them with the process. If you would like to benefit from this supportive environment become a member of LPMS today, alternatively read more about the benefits of membership, or get in touch with us to discuss further.
Our members are Valuers, Land Surveyors and Quantity Surveyors.