Recently one of our underwriters, Connie, was asked to provide a claim scenario for a firm that does property tax consulting, which also includes some involvement in litigation on their client’s behalf. Connie turned to her underwriter, Michelle Duffet at Insight Insurance Services, for a detailed explanation for this particular risk. We thought Michelle’s response contained some valuable, insightful information and are happy to share it with you with her permission.
Hi Michelle,
I was asked by our agent to provide claims scenarios for this type of risk. I went to your website for that, but I can’t see where this risk fits in any of your categories. I appreciate your help and look forward to hearing from you.
Best Regards,
Connie Hatch
TAGA Professional Liability Underwriter
Hi Connie,
First and foremost, it is an absolute truth that you need not do anything wrong to get sued. We estimate that more than half (and maybe as much as 75%) of all professional liability claims arise out of situations where the Insured professional has conducted their business properly. However, that doesn't stop clients from claiming that they misunderstood possible outcomes, or they were purposely mislead, or they paid for services and didn't receive any value in return.
For this firm (Company Z) in particular, these all seem to be very real possibilities. Unless all clients receive the full property tax relief that was sought, it can be expected that at some time, a disappointed client will sue out of anger and resentment of the fee paid to Company Z. Assuming Company Z has a good contract in place and performed the services promised, these factors will aid in the defense of such a professional liability suit but they won’t necessarily prevent a lawsuit nor will they allow for an automatic, quick dismissal of a lawsuit.
It is also possible for the firm to make an error. Even the best run companies occasionally miss an appeal or filing deadline, file the wrong form which stops an appeal or protest from further consideration, overlook a small piece of information in identifying issues, or misinterpret a change in tax law. Sometimes these events result from an internal error; sometimes they result from a personal emergency (such as illness or a death in the family). Even a seemingly small, insignificant error can provide the spark to ignite a client dispute. And again, while most clients are reasonable, there is no guarantee that all clients will be considerate.
One other point of consideration; it has been illustrated across all types of professional liability insurance that claims increase in a tough economy. On an overall basis, clients are much more demanding of receiving a measurable value for the fee paid and expect perfection in professional services when money is tight. When the economy is booming and clients are feeling wealthy and hopeful, claims activity decreases. In the current economic climate, the firm should expect that clients will be tougher to please. The law of averages will eventually result in a professional liability claim.
I hope this is helpful. Please let me know if you have other questions.
Thanks
Michelle A Duffett
Insight Insurance Services
