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What is professional negligence?

If you offer advice, skills or knowledge as part of your work, you have a duty of care to deliver a high-standard and professional service. Failure to do so could result in an accusation of professional negligence.  

So, what’s considered professional negligence and how can you protect your business if a claim is made against you? 

If you offer advice, skills or knowledge as part of your work, you have a duty of care to deliver a high-standard and professional service. Failure to do so could result in an accusation of professional negligence.  

So, what’s considered professional negligence and how can you protect your business if a claim is made against you? 

Written by
Mubina Pirmohamed
Business and landlord insurance expert
17 MAY 2021
3 min read
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What is professional negligence?

You could be accused of professional negligence if you give a client the wrong type of advice or information and they end up losing money because of it.  

When you offer a professional service, you have a duty of care towards your clients. After all, they’re paying you for your skills and knowledge, so need to be able to trust in your expertise. A ‘duty of care’ can be defined as a standard of skills expected from a professional in that specific trade or industry.  

But if things don’t go to plan, and your client ends up losing out financially (and, in some particular cases, in other ways such as mental distress, pain or physical inconvenience) they could accuse you of being negligent and decide to make a claim against you.   

Examples of professional negligence

A professional negligence claim can be made against a whole range of professions, including but not exclusive to: 

  • Solicitors 
  • Accountants 
  • Builders 
  • Financial advisors 
  • Tax consultants 
  • Insurance brokers 
  • Architects 
  • Fitness coaches and trainers 

Let’s take the example of a personal trainer. A client, who has an old injury, hurts themselves again during a training session. If the personal trainer forgot or failed to ask their client about previous injuries, they could be considered liable and be accused of professional negligence.  
Other scenarios could be: 

  • A tax consultant fails to advise their clients about any tax relief available 
  • A surveyor fails to identify major structural damage to a building during a property sale 
  • An insurance broker misleads their clients about the suitability of an insurance policy 

When can a professional negligence claim be made?

Under UK law, three things need to be established for a claim of professional negligence to be made: 

  1. Duty of care – you entered into a contract in which you guaranteed a duty of care – a common standard expected from a professional in your industry or trade.  
  2. Breach of duty – you did not meet the standards expected of a professional in your position and you did not deliver a service with reasonable skill and care.  
  3. Loss suffered – your client suffered a financial loss as the direct result of your negligence.  

What is pre-action protocol for professional negligence?

Since May 2018, anyone intending to make a professional negligence claim must follow a ‘pre-action protocol’. These are steps to try to settle a dispute before it ends up in court.  

Preliminary Notice 

The first step is a Preliminary Notice – a notification in writing by the claimant informing the professional that they intend to make a claim, giving their reasons why. The Preliminary Notice must include a brief outline of the claim, a general figure of the value of the claim, and a request that the professional lets their indemnity insurers know. It’s always best to speak to your solicitor to make sure you include everything in your Preliminary Notice. 

Letter of Claim 

  • The second step is a Letter of Claim – a detailed letter that includes: 
  • the facts of the case  
  • supporting documents 
  • the allegations against the professional  
  • an estimate of the financial loss suffered
  • confirmation that a solicitor has been appointed by the claimant, and whether the claimant wishes to go to court or not 

If you receive a Letter of Claim and you have professional indemnity cover, you should forward the letter to your insurance provider as soon as possible.  

Letter of Acknowledgement 

You’ll need to acknowledge the Letter of Claim within 21 days of receiving it. If you don’t, it could invalidate your insurance policy. 

Once you’ve sent a Letter of Acknowledgement, you’ll have up to three months to investigate and respond to the claim made against you.   

Letter of Response and/or Settlement 

You’ll have the chance to admit or deny the claim in a Letter of Response. This should be followed up with a Letter of Settlement, in which you can make a proposal to settle the dispute.  

The purpose of the protocol is to encourage both parties to agree to a resolution or settlement without the need for a costly court process.  

If you deny the claim in your Letter of Response and don’t send a Letter of Settlement, the claimant can then start court proceedings.  

Court proceedings are considered a last resort and an Alternative Dispute Resolution (ADR) to settle the dispute should be tried first – for example, mediation, third party arbitration or through an Ombudsmen scheme.  

How can I protect myself against claims of professional negligence?

We now live in a world where professional negligence claims are becoming more and more common.  

Even if you feel you’ve done nothing wrong and have performed your service to the best of your abilities, you may still have to defend yourself against allegations of negligence. This could result in expensive legal fees that could be financially devastating for your business.  

Professional indemnity insurance (PI) can protect you against pricy legal and compensation costs, and help you recover financial losses if a claim is made against you.  

One of the quickest and easiest ways to find professional indemnity insurance is to compare quotes with us.  

At Compare the Market we can help you compare our wide range of business insurance quotes including public liability and employer’s liability cover.  

Running a business is challenging enough without the worry of expensive legal claims hanging over you. Compare with us and find tailored cover to protect your specific business and profession.

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