Breach Of Contract

I was talking to an IT client recently about their professional indemnity insurance. They were looking at increasing the amount of cover they had to comply with some contracts they were involved in. I have always used Hiscox as their insurer and the reason why became very clear in the fullness of the conversation.

The client had looked at other options for his insurance and obtained, on the face of it, a very competitive quote for like for like cover.

"Yes, its professional indemnity with a £1m limit and a £500 excess" said the client.

Dont trust to luck

"OK, does it include unintentional breach of contract?" I enquired.

"Do you mean professional indemnity?" he repeated

"Yes, but how far does this go?"

This is where the usual knowledge of a business owner would breakdown. And fair enough. My knowledge of C++ and CSS is pretty non existent so why would this particular client know more than demonstrated? 

I explained that most "cheaper" professional indemnity policies would provide cover only where negligence was established on the part of the IT contractor. Most claims arising will be where there has been a genuine misunderstanding in what the delivered product or service will do. For instance, I have a claim on currently where the contractor built a web site for a customer, perfectly correctly, but the customer claims it is not what they wanted or expected and is claiming it has damaged their business. There is no evidence of any negligence so a policy based on this would not respond.

Fortunately, the claim concerned is covered by Hiscox and includes unintentional breach of contract and so this is being dealt with by the insurers.

Please remember, therefore, that in all cases, you need to look beyond the headlines of a policy before trusting it to protect your business. Don't trust to luck, especially if you are considering cutting corners. Take expert advice first.