Before getting stuck in to some examples, here is a brief re-cap on Professional indemnity insurance. If you want to read more, then visit our Professional Indemnity insurance page.
Professional indemnity insurance covers you for making mistakes. From large scale architectural errors, to smaller print run mistakes, and anywhere in the middle, mistakes can be costly to put right and have expensive legal fees to cover.
Professional Indemnity claim - making a mistake
Different professionals will make different mistakes. For instance a set designer’s worst nightmare is beautifully demonstrated in the rockumentary “This Is Spinal Tap”; where a drawing for a set design for Stonehenge is given in inches rather than feet…resulting in a miniature version of what was wanted.
Professional Indemnity claim - forgetting to do something
Sometimes the mistakes can be more forgetful, such as where a graphic designer used a copyright protected image as a placeholder for a flyer, but then forgot to replace it with the real image before sending the flyer to the printers, resulting in a print run being discarded and the cost of the print run being paid for by the insurers.
Professional Indemnity claim - copyright infringement
As in the example above, copyright infringement does not have to be so clear cut as using something that is obviously owned by someone else is used. In October 2017, US rapper Eminem won £315,000 in compensation from the New Zealand National Party after they purchased a song from an Australian-based music production library, called "Eminem Esque", and used the song in a political broadcast.
The song had been registered with one of New Zealand’s main industry copyright bodies, the Australasian Mechanical Copyright Owners Society (AMCOS), and was licensed and available for purchase. So the NZNP thought they were safe to use it for their advert - they were wrong.
The song was judged to be a copy of Eminem’s own Lose Yourself. The Judge acknowledged that “the Party took extensive advice and sought assurances from industry professionals that the track could be used by the Party’, but that wasn’t enough to prevent the National Party being issued with the fine, and now starting legal action against the production house that supplied the song - something their professional indemnity insurers (if they hopefully bought some) will now be having to investigate.
In case you are wondering how similar the songs are, you can see the political broadcast video here and judge for yourself:
"Eminem Esque" in the ad - https://youtu.be/470bdH73TUY
Eminem's "Lose Yourself" - https://www.youtube.com/watch?v=_Yhyp-_hX2s
Professional indemnity claims can take time to appear
As with the Eminem example above, sometimes the mistakes take time to come about. For instance a software developer may create a program that appears fine when completed, but when left to run for a few months can develop significant bugs that cause the program to be unsuitable for use.
This delay in making a claim is why it is important to continue purchasing Professional Indemnity insurance even after a contract has finished; in case the client discovers your mistake after you have finished working. At Dinghy, we offer reduced price insurance if you stop working, so you can save your costs but keep your vital insurance in place.