Mistakes happen. Even the most skilled professional cannot confidently say they never have and never will make a mistake in their line of business.
This could be a simple oversight, to a miscalculation, or merely taking your eye off a subcontractor for a few hours. You can’t be in all places at once right? So what would you do if this error caused one of your clients a financial loss? Do you take it on the chin, make your apologies, hope they forget about it and move on? In an idyllic utopia you probably could, but unfortunately, events don’t often turn out like that.
Traditionally, a Professional Indemnity (PI) policy, or Professional Liability or Errors & Omissions PI, was a cover for professions such as lawyers, doctors and accountants. However, interior designers have been moving further to the front of the line in this regard and it is fast becoming commonplace to have this cover as a contractual mandate from clients.
According to Ian Campbell, underwriter, Chartis Insurance, as an interior design firm grows and becomes more successful, it may not be able to personally oversee every aspect of a job. PI policies cover mistakes made by the designer and their colleagues as well as those of independent contractors.
A General Liability (GL) policy will not pick up professional liability exposures. A GL policy primarily covers bodily injury and property damage and contains a specific exclusion for professional services or advice rendered.
“A PI policy responds to claims made by your clients for financial loss they have suffered as a result of the services they have paid you to carry out. It also provides cover for allegations of negligence, even in situations where you feel you fulfilled the brief you given,” said Campbell.
“In its simplest form, a PI policy could be triggered through a letter written by your client requesting that you indemnify them for X amount. In this instance an insurer can step in providing you with legal assistance and advice whilst supporting you out of this situation as best as possible.
The policy will pick up the legal defence costs that can quickly mount up when defending a claim or allegation and will pay out for any damages you are required to pay. The premium is an annually payable amount allowing you to ring fence these exposures into one known figure.”