WHY IS PROFESSIONAL INDEMNITY INSURANCE VITAL FOR VALUERS?
A recent event highlighted that professional indemnity – sometimes called professional negligence – insurance could save a business from being shut down. Essentially, this type of policy provides cover against being accused of not performing the task you are paid for to the standard expected. The accusation is enough to cause a huge cost in time, effort and probable legal costs, even if you haven’t actually done anything wrong.
A set of three 16th Century books were offered for valuation and the figure given was £3-5,000. At auction, there were a number of bidders and the hammer finally fell at an astonishing £345,000 before auction costs and VAT were added.
Great news for the seller, obviously. But there could have been an alternative outcome. What if the seller – armed with a valuation of up to £5,000 – had accepted an offer of, say, £10,000? They would have been very happy until they saw the auction result. In this increasingly litigious world, the likely outcome would have been a law suit against the valuer. Making up the difference between £10,000 and £345,000 plus the inevitable legal costs – it is well known that the only winners in court cases are the law firms – could easily put an uninsured valuer out of business and maybe even out of their home.
Such events do not happen often and we all know that having more than one bidder keen on an item can affect the final price but it only needs one in a lifetime to ruin a reputation and a business.
Insurance is not an expense – although the cost is a legitimate business expense for tax purposes – but an investment in safety and peace of mind.
The relatively low cost may well surprise you – in a nice way – and it costs nothing to ask for a quotation.