Professional Indemnity Claim Examples

A survey conducted on behalf of Axa found that 75% of small business owners are worried about making professional mistakes, yet less than half of those who give clients advice take out professional indemnity insurance.

No matter how careful you are, an unexpected mistake could happen at any time, and in some circumstances, it could be a disaster to the business and for the reputation you have worked so hard to build. Professional indemnity claims could arise as a result of your business activities from providing an incorrect medical diagnosis to delivering graphic designs that don’t adhere to the brief. As such, different businesses can benefit from taking out this type of insurance and protecting their work.

The below case studies highlight how professional indemnity insurance can respond to claims. These claims examples are for illustrative purposes only

A graphic designer was briefed by their client to provide price tags that would fit round the stem of Christmas trees. The tags would need to withstand exposure to the elements and stay fitted to the tree while it grew. The tags did not survive the test of time; the ink ran, rendering them useless to the client. The client lost money due to this oversight and took legal action against the graphic designer for professional negligence. The graphic designer's professional indemnity insurance policy covered their legal costs and compensation payments to the client, a total cost of over £3,000. The client didn't pursue their claim for the full cost of the labels; if they had, the claim could have cost as much as £100,000.

A concert hall’s acoustics were so bad that anyone sitting at the back of the hall couldn’t hear what was happening on the stage. As a result, the company responsible for designing the acoustics was sued for negligence and the claim was settled for £35,000.

A software developer was hired to develop a website for a company and, despite their best efforts, the project suffered a series of delays throughout production stages. When it finally went live, the claimant reported a high number of defects. The customer claimed that the delays and defects were all the fault of the developer, making them liable for the money lost.

On the basis that the project was not delivered fault free, the software developer agreed that they needed to accept some liability for the problems faced, despite it not being his sole responsibility. The insurer assisted to settle the case quickly, resolving it for a fraction of the sum the claimant had demanded.

A marketing agency printed some brochures for a client. Unfortunately, the printed document had the client’s wrong contact details. The reprinting costs of over £12,000 were met by the agency’s professional indemnity insurance.

A solicitor acted for Claimants who purchased a residential property in 2005. They were later accused of failing to spot an old railway tunnel which ran under the property and which, according to the Claimants, rendered their property unmortgageable. The losses claimed were around £150,000, but during the insurers investigations they identified a title indemnity policy that would satisfy any lender’s concerns for less than £500.