Professional Indemnity Insurance – The Sunset Clause and why it’s needed for more than just weddings

Professional Indemnity Insurance (PI) as it is known, is a cover that protects you and your business if you “fail to present work to a professional standard”. This is a wide definition that is usually decided on by a judge in a court of law – there is no specific definition and remember, photography and video making is an art and therefore what is “professional” can quite often be subjective!

What is a good example of a PI claim?

A good example of where PI would be useful is if you were to undertake wedding filming and the bride and groom felt the video you produced was substandard or you had missed key elements. They may then choose to issue legal proceedings against you. If this was the case, PI insurance would cover the costs of defending and/or settling the claim.

Is it just cover for weddings then?

No. Any “one off” event where you will not have the ability to shoot again, without re-staging, would require P.I. insurance if you truly wanted to be protected. This could be an 18th birthday party, a corporate event or dinner or even a training course! It is important that you truly understand the event before committing yourself to shooting it – this will help with the decision if P.I. insurance is required.

What is the difference between Public Liability and Professional Indemnity?

PL cover is for damage to another person or their property whilst PI as it is known, covers your liability for failing to produce work to a professional standard. Professional Indemnity Insurance provides you with financial protection for your business, the costs of defending claims made against you, including damages that may become payable. Claims can occur where a client or other person suffers financial loss as a result of alleged errors or omissions on your part.
 

How would having Professional Indemnity Insurance help me?

You may be sued unfairly by a client who is merely dissatisfied, but has no valid claim. This could involve you in substantial legal costs and non-productive time. From the legal standpoint, the position with regard to the "duty of care" is the same for any professional. If you offer a service in a specific area or set yourself up as a specialist, you owe a "duty of care" to anybody who might reasonably rely upon your service and advice over and above that owed by the ordinary man in the street.

Where could the “danger” areas be for me as I don’t shoot weddings?

If you shoot commercial events, like training courses or corporate events the dangers are usually in how big the Company is! If you undertake work for a multinational and you make a mistake, they usually have a large legal department who may go to great lengths to recover their “losses”.

Similarly, if you have a small “one man bad” who was relying on the footage that you were providing, then they may make a claim in the small courts against you.

The customers which seem to be the “safest” are those of a decent size who do not have their own legal team. They will usually refuse to pay you and never use you again and this can be where the risk ends.

Just be mindful, this is an average position – if a company feels truly “wronged” they WILL take action against you no matter what. To this end, it is probably better that you have the PI cover rather than not.

PI is on a claims made basis – what does this mean?

“Claims made” basis means that you must be insured at the time you undertook the work AND at the time you received the complaint. For example, if you undertook some work on the Monday and failed to renew your policy on Tuesday and then had a complaint on Wednesday, you would have NO PI insurance to cover it – even though the insurance was in force at the time you undertook the work! It is therefore important that you do not have a break in cover as this can put you in a position where you have no insurance.

What is the Sunset Clause?

The sunset clause as it is commonly known, protects you for work you have completed when you retire or stop trading. A client can pursue you for “poor work” up to 6 years after the event! In reality, if they have not made a complaint before this time it is unlikely a judge in a court of law would look favourably on their case however, it is their legal right!

Therefore, if you retire, stop trading or more commonly stop shooting weddings, it is important that your PI insurance is maintained for at least 12 months and probably 24 months to be on the safe side.

This means that if a customer of yours comes back with a complaint during the 2 years, you have insurance to cover you.

Remember, if the cover is not in place then Insurers could refuse to consider a claim against the policy.

I don’t make mistakes therefore I don’t need it. I have been trading over 20 years and never had a complaint. I only shoot friends weddings.

This is a short sighted view and one that really has no place in business today. It doesn’t matter if you believe that you haven’t made a mistake or that there is nothing wrong with the work you have produced – it matters what a judge in a court of law will say! Your customer could have a very expensive and clever lawyer who convinces the court you are wrong – with no insurance you will be left to pick up your legal fees, their legal fees as you have lost AND the compensation the court orders!

Remember, the pain might not stop there. If it is a slow news week in your local area you could find yourself on the front page of the local paper and discover your work starts drying up. Plus, once that judgement is made it can be found online in perpetuity meaning any potential customer of yours that searches for you via a search engine is likely to come across it! Ask yourself this, would you agree to book someone who has been taken to court previously for poor work?

What should I do now then?

• Always make sure that the cover you have in force is suitable.
• Always use a reputable Insurer. If the company that you are with do not offer PI cover, then the chances are they are not designed for the professional market. There are a couple of well known insurance companies that actively advertise video and filming insurance but do not offer PI cover – don’t use them if they don’t offer the cover that is right for you.
• Try and always support your Association. They go to great lengths to find a reputable company for you to use, plus, if you are unhappy with the service the company offers you can always complain to the Association – they may have more sway on your behalf!

Insurance Companies want you to be safe and not make claims, as much as you do - just make sure you are covered for these events and always give your broker as much information as you can – it is worth spending the time getting it right whilst you can to ensure that any claim can be dealt with as smoothly as possible.

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Call us on 020 3633 2280 for more advice or if you have a specific question.

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