Professional liability: Even experts make mistakes

March 1, 2018

Anyone wishing to offer people good advice with respect to their decisions bears a high level of responsibility. Yet not even the best specialist or expert is infallible. When a decision proves to have been wrong, things can quickly get expensive. Here are five real-life stories:

The management consultant with a data leak

A freelance consultant is developing a comprehensive expansion strategy, including target customers and possible new products, for an SME. During the key phase the consultant literally works night and day. At a very late hour, he sends a detailed project update to his supposed client. In reality he sends the email to a CFO of the same name at a competing company, with whom he has also had professional dealings in the past. While the latter is delighted to receive such valuable information, the real client has to change their strategy and holds the consultant to account.

The IT service provider with a performance problem

An IT specialist operates Internet-based software solutions for various companies, including the quotation system for a health insurer. When an employee forgets an update that is critical to the system, the IT service provider has to take it offline for several hours. Unfortunately, it is fall and many customers are requesting new health insurance quotations. The health insurer receives a deluge of customer complaints, and it calls its IT service provider to account.

The geologist facing a torrent of water

A successful businessman has purchased a dream plot with access to a lake. To make optimal use of it, he builds downward and creates two underground stories. But after heavy rainfall, water from the lake forces its way into the soil. He finds his foundations swimming in ground water. The building has to be renovated and resealed at a considerable cost. The client is of the opinion that the geologist consulted did not sufficiently clarify the nature of the ground and wants to pass the costs incurred across to him.

The notary public in the tax trap

A wealthy private individual wants to transfer a property in the mountains to her son. She wishes to do so in a way that incurs as little tax as possible, with the son making a modest monthly payment. The notary public in question recommends a gift, combined with a property pension. Unfortunately, he neglects to clarify with the tax office whether this transfer is deemed to be free of charge and thus constitutes a tax deferral. The family gets a nasty surprise in the next tax assessment. A furious phone call to the notary public follows: "There will be consequences. We are engaging an attorney."

The property manager facing a construction botch-up

A development with a total of 20 residential units shares a common underground car park. The condominium owners have appointed a property manager for organizational purposes. During a tour, the latter discovers cracks in the ceiling that were overlooked during the building inspection. He discloses this problem at the next owners' meeting – but neglects to set in motion a timely repair. The warranty period for construction defects expires, and the main contractor rejects any responsibility. Who now has to pay out for the expensive repair of the garage ceiling?

Protect yourself as a freelancer

Happy the person who has taken out cover to protect themselves as a consultant and expert. Professional indemnity insurance for consultants and advisors has a two-fold effect: It offers protection against unjustified claims and covers the financial consequences of contravening one's professional duty of care – even in the event of gross negligence in certain circumstances. At Zurich it also covers secondary risks, like visitor accidents or property damage during trade show activities. Engineers and IT experts can also protect themselves with an industry-specific solution.