by Gordon Piggott
What is your business?
The assumption made here is that you’re providing a professional service of some kind, that you've been trained to a high standard, and that you're offering your clients the benefits your practice provides. At the very least, as a coach you provide your clients with deeper insight and helping them use that knowledge to make their life better, whatever “better” may be.
It is your business to offer that service to a client. In return, the client both benefits from the service and pays you for it. From the moment you offer a service, a contact is created. And the instant a contact is created, there is an expectation about how that service will be provided. That's where the potential problems occur.
Client expectations can sometimes be higher than what is reasonable for the circumstances. In the best scenario, that expectation is set out in a terms of service document or a document of engagement (setting out the basis of the contract and what the client may expect) and a fee structure (what the practitioner expects of the client).
Most business relationships start well, with good grace on both sides and neither party expecting things to go wrong. Yet as with many aspects of life, it’s better to expect the best but plan for the worst, and that’s where professional liability insurance comes in.
First let us establish exactly what a claim is. A claim means that from the client’s point of view, you made some professional error or omission in your dealings, which caused them a loss. Such a loss maybe wholly emotional in nature, although it could be substantially physical, which brings about the financial claim. The second part of a claim is the redress (compensation) sought by the client. A complaint is not really a complaint without the issue of redress.
Before we investigate redress, let us look at the three broad categories of claims.
The least serious: A complaint that your service was not up to scratch in some way—and the usual claim is a refund of charges made. At best this is a disgruntled customer who is unlikely ever to come back to you.
The most serious: The complainant makes outrageous claims, and then starts litigation. If a claimant wants to go to court, there is little or nothing you can do to stop them. The trouble is the high cost of litigation, even if it never goes to court. Lawyers' costs can run into the thousands just to review and prepare cases. If you do not respond appropriately and/or you do not engage a lawyer to defend you and it does go to court, poor defence or NO defence can ruin your case and mean defeat, even if, in reality, you had right on your side.
The third category is a claim that falls somewhere between these two extremes.
What to do if you are insured and receive a claim
1. Tell the insurer IMMEDIATELY once you are aware of the issue. To delay could invalidate your claim.
2. Be absolutely sure you receive a written receipt of claim notification.
3. Do NOT make a settlement offer.
4. Do NOT hire legal representation—let the underwriter do it.
Professional liability insurance: What’s in it for you?
The benefit to you is that an insurer takes financial responsibility (up to the limit of your coverage).
The purpose of insurance is to cover those potential events that could financially ruin you if they occurred, in return for a modest fee (your premium). Professional claims can be extremely high and you do not know just how much they will cost.
A final note
Being insured does not remove the claim from you. It is still your claim and your responsibility. What it does is “indemnify” you against the costs incurred. Note that in return for taking responsibility for your costs, your insurer takes over the management of the claim. It's only fair really—they pay, so they say how it will go.
Westminster Indemnity Ltd launched in 2004. It is the brainchild of renowned businessman Gerard O'Donovan who, together with Gordon Piggott, brought this unique product to the market. No other company offers the totally online experience that WI Ltd does.
Westminster Indemnity is a specialist insurance company that offers professional liability insurance coverage to all of our members in the UK, US and Canada at an excellent rate. Please click on one of the links below to obtain a quote.