Livelihoods at Risk

Every year in Australia thousands of operators involved in design within the building industry, including kitchen and bathroom designers, feel threatened with unplanned costs arising from a dispute with a client.
Recently, a company which specialises in the design and advice in relation to commercial fit outs, provided design advice in relation to the refurbishment of a hotel complex. On completion of the project, the design specification in respect of the kitchen areas proved to be erroneous, and consequently a dispute arose with demands to rectify the kitchens.
Legal costs and unforseen fees to investigate, defend and settle a claim such as this can be expensive. In this particular case, the rectification costs were in excess of $100,000. Even if you are found to be blameless, the cost of defending an allegation of professional negligence can be substantial and there is no guarantee that you will be able to recoup these costs, even if you win the case.
Any person offering design, advice or consultation is considered to be a professional and can be exposed to allegations of professional negligence and subsequent legal action by disgruntled clients. Without the protection of Professional Indemnity insurance, a business – whether an individual operator or a corporate entity – can be exposed to crippling legal and compensation costs in the event of action being taken, which could seriously impact on the financial future of the business.
Alan Lyne of leading Australian insurance broker InterRISK, a business partner of KBDi, advises that “Professional Indemnity Insurance provides cover for damages and certain other amounts which you may become legally liable to pay as a result of any actual or alleged negligent act, error or omission in the conduct of your professional services. “
In addition to covering you against an allegation of incorrect advice or design, he explains a Professional Indemnity insurance policy can also offer protection against the following:
• Unintentional libel or slander occurring during the conduct of your professional business
• Breaches of the Competition and Consumer Act 2010, the Fair Trading Act 1987    (NSW ), or similar legislation in other States and Territories
• Unintentional infringement of others’ rights of Intellectual property
• Costs incurred in as a result of attendance at an official Inquiry, arising from the conduct of your professional services
• Loss of or damage to third party documents while in transit or in your care  during the course of your professional services
• Your liability in respect of the acts, errors or omissions of any sub contractors appointed to carry out the professional services on your behalf (Cover does not extend to the individual sub contractors themselves). For example if you engage an engineer or architect to provide advice on a particular job and that advice proves to be incorrect and subsequently causes a financial loss to your client, you will be covered for any action taken against you as a result
Insurance is one of those costs which may seem to be optional – until it is needed. The issue is we never know when it will be needed.

KBDi offers its members through InterRISK Australia a package of Professional Indemnity and Public Liability Insurance, specially designed and competitively costed to suit Kitchen and Bathroom Designers.
For confidential advice on insurance solutions for your business, Alan Lyne can be contacted at alan.lyne@interrisk.com.au or on 02 9346 8050.
Please note that this is not financial product advice and does not take into account your particular circumstances or needs. You should obtain advice from a qualified insurance broker operating under an Australian Financial Services Licence.

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