In a modern world we rely upon services provided by others and the increased use by business of outside consultants has increased the scope of the term “Professional”. A professional is now often regarded as any person who offers ‘specialist advice or service’ and not just people like Accountants, Solicitors or Architects. For example an IT, Media or Design and Construction company.
But how does liability arise?
The professional person must exercise whatever degree of skill and care is reasonably expected of any competent person in that profession at that time. If a person provides advice or a service to another and carries that work out negligently, they can and may be held legally liable for the consequences.
Claims made’ insurance
Professional indemnity is written on a “claims made” basis. This means that the policy covers claims made (and reported to insurers) during the currency of the policy period unlike most liability policies which cover the loss occurring during the currency of the policy.
A claim is generally notifiable under a PI policy when the insured first becomes aware of a circumstances that could lead to a claim – this could be anything from a verbal criticism to receipt of a written statement of claim. The interpretation of when this situation occurs is the source of frequent policy disputes between the insurer and insured. If in doubt notify insurers and let them decide if the matter is a notifiable event.