Civil liability insurance and professional negligence explained

In the modern world, professionals need to ensure they have sufficient civil liability protections to guard against professional negligence

Advertising, consultancy, contractors, design, inspection, intermediaries, marketing, project management and software development. Just to name a few, can all become the target of civil liability allegations and should consider professional indemnity insurance.

So... how can your businesses protect itself from costly legal disputes and civil liabilities?

Protections against civil liability claims include:

1) Contractual conditions

• Specific description of services – can reduce the risk of any misunderstandings occurring down the line.
• Limitations of liability – will attempt to restrict the damages one party can recover from the other party. 
• Consequential losses exclusion – will attempt to restrict the damages which are not a direct result of an incident but are instead consequences of that incident. 
• Performance standard – your contracts provide a performance standard no greater than reasonable care and skill.

2) Complaints handling

A complaint is a dissatisfaction, whether written or oral, whether justified or not, about your failure to deliver a service. A six step strategy can be found in the Complaints Investigation Toolkit to mitigate potential civil liabilities.

3) Risk management

• Professional training and qualification program

• Standard contracts vetted by a legal professional

• Written guidance for customer engagement

• Conflicts of interest policy and procedure

• Second pair of eyes sign-off procedure

• File audit process

4) Professional indemnity insurance

• A negligence policy – provides cover if you breach your duty of care, by way of a negligent act, error or omission. 
• A civil liability policy – provides cover for negligence, breach of contract, breach of trust, breach of fiduciary duty or breach of statutory duty. A civil liability insurance policy does not restrict cover to the nature of the civil wrongdoing.

Legal viewpoint:

Civil liability claims brought under professional negligence occur when a service provider doesn’t perform their responsibilities to the level required of a reasonably competent person within their profession.

However, if they have a contract with yourself and can prove you failed to deliver on the professional services that were agreed, they potentially have a higher chance of making a successful civil liability claim under breach of contract. 

Consider reading about directors' and officers' liability insurance

Civil Liability Insurance - Posted by Get Indemnity

This guide is for information purposes and based on sources we believe are reliable, the general risk management and insurance information is not intended to be taken as advice with respect to any individual circumstance and cannot be relied upon as such.