| Professional indemnity insurance claims are not, as is | | | | produce sound advice based on his technical |
| commonly assumed, solely the experience of those | | | | knowledge and experience but also to communicate |
| who churn out work containing technical deficiencies. | | | | it effectively - good communication is what makes |
| They extend to cover situations in which consultants | | | | the difference between producing a solution and |
| probably did nothing wrong but the client made a loss | | | | providing a service. |
| and decided to attack all potential sources of | | | | Sometimes the consultant has to be prepared to go |
| compensation; or the contractor made errors and | | | | beyond communicating advice required of him under |
| subsequently went into liquidation; or there were so | | | | his appointment, as disputes may arise through |
| many parties involved, all with different versions of | | | | others in the team failing to communicate as |
| events, that criticism of the consultant was an | | | | effectively as they might. Whilst it is true that |
| inevitability. | | | | consultants create problems by exceeding their brief, |
| All consultants, therefore, need to protect their | | | | in practice there are circumstances in which doing so |
| assets against claims. This is partly achieved by | | | | is the best way to protect against spurious |
| maintaining professional indemnity insurance cover but | | | | allegations if the preventable is allowed to deteriorate |
| only if the terms of coverage are suitable and the | | | | into the inevitable. |
| limit of indemnity is adequate. | | | | It should be possible to communicate the relevant |
| All practices, even those with clean claims records, | | | | message in such a way as to achieve this whilst not |
| should review their limit of indemnity as a matter of | | | | materially affecting the consultant's exposure to |
| course at each renewal and increase it if appropriate. | | | | liability. |
| The incidence of claims exceeding the limit of | | | | A carefully worded letter might flag a potential issue |
| indemnity is already much higher than it used to be | | | | to the client and merely suggest, with appropriate |
| and is a trend which is set to continue. Consultants | | | | disclaimers and qualifications, that the client take |
| whose liability exceeds their insurance have to fund | | | | further advice - which the consultant himself might |
| the balance out of their own assets to the extent | | | | provide for an additional fee, or which the client might |
| they can. | | | | procure from elsewhere. Such cases may constitute |
| Effective risk management is as much about | | | | circumstances which might give rise to a professional |
| preventing spurious claims as it is about avoiding | | | | indemnity insurance claim and which should therefore |
| genuine errors. | | | | be notified to your insurers. Either way, our specialist |
| The task of any professional person is not solely to | | | | claims brokers are available to offer advice. |