Professional Indemnity explained for property professionals
31 August 2017 2361 Views
Giving clients reliable advice when they are buying, selling or letting a home lies at the core of every successful estate and letting agency business.
Your clients want to trust your opinion but the subjective nature of giving out the right information can leave a big margin for error, especially in these times of increasing regulation of property businesses.
Because of the large sums of money involved in property transactions, if a customer feels they have lost out financially because your advice did not measure up to their expectations, they can claim compensation.
Why do estate and letting agents need professional indemnity cover?
Standard professional indemnity insurance for estate and letting agents helps protect them in the event that a client of theirs claims there’s a problem with the work they’ve done. It can cover costs if the agent needs to pay compensation to correct a mistake, and can also cover their legal defence, including claims relating to:
Negligence, negligent misstatement, negligent misrepresentation or breach of duty of care
Defamation of or infringement of intellectual property rights including copyright and trademarks
Dishonesty of partners, directors, employees or self-employed freelancers
Most professional bodies for property people require members to take out adequate professional indemnity cover, such as the National Association of Estate Agents (NAEA), Association of Residential Letting Agents (ARLA) and National Approved Letting Scheme (NALS)
Do you need professional indemnity cover?
If you are in business as a property professional, then you should consider taking out cover for peace of mind.
A professional indemnity claim can cost a significant amount of time and money to manage that can potentially financially harm your business.
The cover is not only for large businesses, but can be vital for property consultants, letting and estate agents working on their own or those based at a single branch or a regional chain.
When will you need the cover?
Professional indemnity insurance is one of those things that sits quietly in the background until you need it – and that call can come at any time.
Besides issues of professional competency, some examples of when letting and estate agents might need the cover include:
Confidential client information is released to a third party without permission or stolen
Example: One worker at an estate agent sold a home before the details were circulated, only for the seller to find out months later that the buyer was the agent's cousin and the new selling price was marked up by 20%
An agency is sued when inadvertently breaching a trademark, copyright or other intellectual property
Example: A letting agent employee was tasked with sourcing an assured shorthold tenancy agreement, only for the manager to discover later that the document was a copy of another agency's agreement with a few cosmetic changes
Defending a claim of defamation from someone seeking damages after claiming a statement harmed their reputation
Example: A seller signed off a property image for an estate agent that included land belonging to someone else as part of the plot for sale. The buyer sued the estate agent for compensation for unnecessary purchase costs when discovering the land was not part of the deal even though the agent had done nothing wrong
In practical terms, the policy will pay for agreed legal costs, damages and claimant costs awarded against you – including those relating to ombudsman hearings or arbitration.
How long does the cover last?
Professional indemnity policies are written on a “claims made” basis. This means that the policy will cover any valid incident reported to the insurer during the policy period. The cover only lasts as long as the policy.
How much does professional indemnity cover for letting and estate agents cost?
Cost depends on level of cover and the type of advice a business offers clients, which is easily adjusted to your business needs so you do not pay for unnecessary protection. As a guide, your business could be fully covered with a premium as low as £12.60 a month.
Call Hamilton Fraser on 0345 310 6388 or email firstname.lastname@example.org for a bespoke professional indemnity policy designed with the agent in mind.