Reply to: Prof Indemnity insurance stipulation

[craig1]

I got a nice contract two years ago because of PI insurance. I didn't originally get the contract as the guy selected had more industry experience; the client made a condition of PI insurance prior to start and he refused to get it. The agent asked me if I had any concerns over getting insurance, I said no and was immediately offered the role pending proof that I'd acquired it in my company's name with a minimum of £1m cover at a reputable insurer. For the sake of a £450 insurance policy (specialised risks on the project made it a little bit more expensive), I secured a 12 month contract at £550 a day.

It was a shrug shoulder time and just bear the cost.

[Ignis Fatuus]

Indemnity for Co or person?

There is a lot of failure to distinguish Ltd Co and person here.

Your Ltd Co signs the contract and provides the services. If it is at fault then it may be sued, but its liability is limited, after all.

Only in a few circumstances (tax evasion, fraud, i.e. criminal offences not civil liabilities) can any action go "through" the Ltd Co to the directors, and in even fewer cases to employees. ISTM that in those cases PI would not imdemnify the individual anyway.

So if by mistake you as an employee cause your Ltd Co to fail in its contractual duty to its client, then the client would have an extremely hard time suing you for it.

We never used to have it, some agent thought it up and now neither contractors nor agents have the backbone to say No, it's not necessary.

[kryten22uk]

My agency contract also stipulates PI cover, and I had a phone argument with them about it (and lost). Its all the more prevalent for my niche, where the PI cover costs £2k, and there is only one insurer (a Lloyds syndicate) who will insure my profession, so they have an entire monopoly on the rates.

[Boo]

On that note, you realise you don't have to sign your name after every post, as your name is clearly displayed next to your post, right?

Right, but I prefer to see the names as I read directly down the page rather than having to scan the leftmost column for every post.

Boo

[GillsMan]

Will you kindly stop saying that.

Boo

On that note, you realise you don't have to sign your name after every post, as your name is clearly displayed next to your post, right?

GillsMan.

[Boo]

Simples.

Will you kindly stop saying that.

Boo

[SueEllen]

Come again?

Just a long winded way of saying in lots of legal cases you can defend yourself.

I know people who have got screwed by lawyers they chose to represent them simply because they didn't bother to read up/become knowledgeable on their own case themselves.

[GillsMan]

Its so typical as well now that you are in place before contracts are signed "conveniently" to asses how you are. Its part of the game of being a contractor the highs and lows. In this case its quite a minor thing, try and see what you can get but don't pay out trying to get. You should be able to do anything a solicitor can do.

Just because we tend to think legal doesnt mean we can ourselves enforce laws - just that they know the practice. You could do some research yourself and even act as your own legal team. Right is might and the law is the law unless their soliciter is bigger and there is ambiguity and you took sugar in your tea that day.

Come again?

[nolly]

Might is right ?

Its so typical as well now that you are in place before contracts are signed "conveniently" to asses how you are. Its part of the game of being a contractor the highs and lows. In this case its quite a minor thing, try and see what you can get but don't pay out trying to get. You should be able to do anything a solicitor can do.

Just because we tend to think legal doesnt mean we can ourselves enforce laws - just that they know the practice. You could do some research yourself and even act as your own legal team. Right is might and the law is the law unless their soliciter is bigger and there is ambiguity and you took sugar in your tea that day.

[theroyale]

Who issues your contract then!?

Its a bog-standard contract issued to all 400 or so of their contractors.

[Robot]

My contract stipulates professional indemnity insurance but my agency hasn't said anything about it/brought it up

Why would the agency say anything? It stipulates it in your contract and you would have read your contract before you signed it, well that's what the lawyers would argue over anyway IMHO.

[SueEllen]

No links, but how many permanent employees take out insurance to protect themselves from being sued by their employers?

Talking to my accountant sister years ago many large companies and organisations have a fund for legal expenses i.e. they self-insure so when an employee sues them they use money from this fund. (Same way that BP is paying for the mess now.)

Small companies and sole traders tend not to due to affordability.

In the case of small companies they tend to go into voluntary insolvency to avoid paying out which is why a few solicitors in the know will get their clients to put down named individuals in the company in any claim. This means if the company goes insolvent the person named on the claim still has to pay out their share of compensation and if that person happens to be the director well........

There as a small trader is legal liable for everything so there is nothing they can do to hide.

[Wanderer]

There are still circumstances where a directors can be personally liable - a limited company is not absolute protection from absolutely everything.

Company Solicitors discuss directors' liability under UK Companies Act

That article is talking about fraud. I doubt that your PI insurance is going to cover than anyway.

I think the conclusion at the end sums it up really.

In Conclusion

A Court rarely lifts the corporate veil of a company, and there are established exceptions, some of which are discussed here. If it may be proven that fraud has taken place or the company is not being used for valid means within the bounds of the law a court may lift this veil exposing the directors of the company to liability. Fraud unravels all.

[Clare@InTouch]

Not if you have a limited company.

There are still circumstances where a directors can be personally liable - a limited company is not absolute protection from absolutely everything.

Company Solicitors discuss directors' liability under UK Companies Act

[swamp]

Well, lets hope the client / agency doesn't try and sue you then. If your company doesn't have the money, they will come after you personally (as the Director). So either way, if you don't have the insurance, just make sure you have £2m in one of your bank accounts just in case.

The purpose of insurance is to offset the risk. Yes it is a waste of money, but the risk of not having it is not worth it unless you have the money to cover the liability.

If you are confident that you don't need the insurance and that you won't get sued and the agency won't find out, then it is a risk you have to decide to take.

Not if you have a limited company.