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As a professional service provider, a simple act, error or omission can be enough to trigger a complaint against you from one of your clients. If this becomes a professional negligence claim, the consequences can be serious. You could find yourself liable to pay compensation, costs and expenses. At the very least you may incur legal costs. You may be exposed if you are a professional service provider, including where you provide:

• advice
• design
• consultancy
• analysis services

Many businesses assume that public liability insurance will cover them. Unfortunately this is not the case. Public liability insurance does not cover claims caused by your professional negligence. It is important to understand the differences between Public Liability insurance and Professional Indemnity insurance.

Public Liability covers claims against you for bodily injury and property damage to a third party that arise from the operation of your business. For example, if a third party is injured on your premises, or if you damage property while visiting a client.

Professional Indemnity insurance covers claims that arise when a third party, usually a client, alleges that your professional advice, design or service was negligent and caused them loss. The loss can be bodily injury, property damage or financial loss. Public Liability insurance covers claims that arise from a breach of the duty you owe people in general. Professional Indemnity insurance covers claims that arise from a breach of the duty that you owe as a professional or an expert. Professional Indemnity insurance covers your civil liability that results from the conduct of your professional services. This includes:

Other costs such as legal defence costs are payable in addition to the limit of indemnity. Donnellys is a specialist professional indemnity insurance broker and we are well equipped to understand your profession and the professional indemnity exposures you face.

• contractual liability,
• liability under the Trade Practices Act,
• defamation,
• infringement of intellectual property right,
• liability for the acts of sub-contractors and consultants, and
• compensation and claimant's costs and expenses.

Other costs such as legal defence costs are payable in addition to the limit of indemnity.Donnellys is a specialist professional indemnity insurance broker and we are well equipped to understand your profession and the professional indemnity exposures you face.

Professional Indemnity insurance case studies
As these case studies demonstrate, any professional service provider can be held liable for their actions. These case studies are examples of the types of claims that may be covered under a Professional indemnity policy, but not under a Public Liability policy.

The building consultant
A building consultant was involved in constructing a house. The owners claimed that the weatherproofing failed and sued the consultant alleging negligence. The matter went to a judicial settlement conference. The building consultant was exonerated but still had to pay over $20,000 in legal costs.

The accountant
An accountant was asked by the client to consider the accounts of the business he planned to buy. The client's business partner had an accountant who provided the figures. The client went on to buy a share in the business. The business did not do well. The client then claimed against both accountants for providing negligent advice. The claim was later settled and the second accountant paid $25,000 to the client in settlement. Although the first accountant was not found negligent, his defence costs amounted to over $100,000.

The building designer
A building designer prepared a town planning application for a self-storage facility using computer-assisted design. While preparing the drawings, there was an error inputting data into the system resulting in the development being three metres shorter than the town planning drawings. The property was subsequently sold to a development company. During construction it was discovered that only 198 self-storage units would be constructed and not 235. The property developer is suing for over $500,000 in damages due to loss of income and value of business.

The occupational therapist
An occupational therapist interviewed the claimant for a position as an accredited rehabilitation provider. The therapist rejected the application as he felt that the claimant did not have the requisite WorkCover qualification. In the same year the occupational therapist discovered that the claimant was working as a case manager for another rehabilitation provider. As the occupational therapist was concerned that the claimant did not have the qualifications he wrote an email to WorkCover and the members of the Association of Rehabilitation Providers in the Private Sector. The claimant alleges that he is appropriately qualified to practice and tha the email was defamatory and has injured his credit, reputation and occupation. The claimant is seeking compensation for general loss of business, custom, and aggravated damages in excess of $300, 000. The matter has been ongoing since 2003.

Make sure you are insured through Donnellys for expert advice to protect against your professional risk.

*Article produced by Vero Profin for public information.

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