What is a professional negligence claim for the self-employed?

No matter what type of contractor you are, no matter what industry you belong in, when you strip things down to the essentials you’re delivering a professional service to your client and, as such, are expected to provide at least a minimum standard of care. Your client will have hired you because of your specialist skillset or your years of expertise and they are trusting you to help their business or project.

With the best will in the world, though, sometimes things go awry. As an engineer, you might use the wrong measurements in a technical drawing, causing problems further on in the project and costing both time and money while the mistake is found and rectified.

Perhaps you’re an independent editor who misses an incorrectly placed comma, causing a gift guide to go to print with incorrect pricing listed. You could be an accountant and accidentally tick the wrong box on your client’s tax form, triggering an additional tax cost your client was not expecting to pay.

These mistakes are likely to be due to human error, however, your client may still have the right to make a professional negligence claim against your limited company. After all, they expect you to protect their business from harm (within the limits of your working relationship) and jeopardising that could be considered a breach of your duty of care.

How is professional negligence different from ordinary negligence?

In our society, everyone is expected to take reasonable measures in order to avoid harming or injuring others. Ordinary negligence holds us and others accountable should we make a mistake which negatively impacts somebody else.

For instance, reversing into another shopper’s car in a supermarket carpark. They could make a claim against you because you should have checked for any obstructions before reversing out of your parking space and damaging their car. As drivers are legally required to hold car insurance in the UK, the cost of the claim would probably be covered by your policy.

As a contractor, you’ll promote yourself on your website and LinkedIn as having a certain set of skills or a particular length of experience and your client will pay for this level of expertise accordingly. However, it also means that you are liable for professional negligence.

So if you make a mistake while carrying out your work, or do something which causes an accident, your service will have fallen short of your client’s expectations and they may be able to claim compensation. Because this has happened in the line of your work, it’s considered professional negligence.

How is it decided if I’m liable for professional negligence?

There are five factors taken into consideration when deciding if you, as a contractor, are liable for professional negligence. These are:

1. Duty: This hinges on the question of whether or not you owe your client a duty of care? Should you have taken precautions to prevent something from going wrong?
2. Breach of duty: It may be established that you owed a duty of care, but can it be proven that you breached it? Did you fail in taking reasonable care?
3. Cause in fact: Were your actions the direct cause of something going wrong? Could the problem have been avoided if it wasn’t for your actions?
4. Proximate cause: This factor examines the scope of your responsibility. So, in your professional capacity, could you have foreseen any risks and taken steps to prevent them?
5. Damages: What actual harm or damage has your mistake caused in real terms? Even if you have indeed failed to take reasonable care in your professional capacity, there needs to be a quantifiable loss or actual damages for a claim to be upheld.

What is a professional negligence claim?

Googling professional negligence claims will get you an awful lot of information about how to make a claim, but not so much about what to do, as a contractor, if you find yourself having a claim made against you.

The short version is that a professional negligence claim is what ensues when your client seeks compensation against you if they believe you have not taken the reasonable care expected and, as a result, have harmed their business or project in some way.

If this happens, you will find the claim follows a procedure known as the Professional Negligence Pre-Action Protocol, which is a framework that aims for the dispute to be settled out of court.

• You will first receive what is known as a Letter of Claim, setting out the factual and legal basis for the claim. This will include any allegations, losses being claimed, plus any key evidentiary documents.
• You are required to acknowledge the Letter of Claim within 21 days of receiving it.
• You then have three months to investigate the claim and provide a Letter of Response which acknowledges the claim and either disputes the claim or makes proposals for a settlement.

Although most cases are settled without the need to go to court, if you are unable to reach a settlement then that’s where you’ll be heading. That process, though, can take another year and you may have to attend in order to provide evidence.

How can I protect myself from potential claims as a contractor?

There are some simple staps you can take to minimise the risk of a professional negligence claim being brought against you:

• Always aim to act in your client’s best interest;
• Brief clients on risks and regularly update them if these risks change or if your project is not keeping to schedule;
• Always adhere to health and safety protocols in the workplace;
• Keep up to date on industry news and regulations;
• Ensure any staff or substitutes are appropriately trained and certified;
• Do not offer advice outside of your expertise;
• Stick to data protection regulations;
• Ensure that your contractor insurance includes professional indemnity cover.

Professional indemnity cover is included as standard in Kingsbridge’s contractor insurance package. If you need to renew your business insurance, contact our expert team or get a quote online.