Professionals need to protect themselves from legal risk before something goes wrong
Errors and omissions in the course of delivering professional services are unavoidable over the span of your career, basically at some point in a professional’s career you will face something going wrong and if not with you probably with a staff member.
If you are in a high risk professional, things will be under the microscope at some stage and you need to do more than just buy insurance, you need to ensure you have the right cover for your business, your client contract works with your insurance and minimises risk and your process, website and representations don’t attract unnecessary risk.
You NEED to proactively manage your risk, so when things go wrong, they are mitigated.
Professional indemnity insurance is just the start
Professional indemnity insurance is a start, but just purchasing cover is not enough. I know, I have seen hundreds of claims and here are some tips to avoid the common issues I see.
Building professionals like engineers, architects, building surveyors and financial professionals like financial advisers and insurance brokers need to be doing at least 3 things annually (preferably coinciding with their insurance renewal) and that is:
1. Get a legal review of your professional indemnity policy wording
Get a legal review of your professional indemnity policy wording prior to renewal of the insurance. This allows for clauses of concern to be addressed at renewal and negotiated at the time of contract negotiation.
And remember that a legal review is not the same as a broker reviewing cover. You may need clauses re-drafted and legal advice by a lawyer who defends claims and knows where issues can arise. Subtle changes can make a substantial difference.
2. Review your client contract terms annually
Reviewing your client contract / contract terms and conditions at least annually to ensure they are consistent with their professional indemnity insurance coverage clauses, exclusions and conditions; and
3. Consider your engagement process
For example, for engineers if you contract with the homeowner or developer rather than a builder or principal can have a significant impact on whether a duty of care arises. Further, we often see issues with scope of your retainer not being properly addressed in practice after entering a contract and opening up more risk of liability.
Tell your insurer about your risk mitigation efforts
Risk mitigation is not just about buying insurance, it is a part, but taking the time to ensure your policy, contract and business processes minimise risk is not only good for the professional but good for your insurer. So tell them!
You never know it may lead to a better result at renewal or allow you to more comfortably accept a higher deductible and reduce your costs.
This article is a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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