Answers provided by IME.
What exactly does this mean for me? Does this mean that :
- the client I have a signed contract with, also account terms, and who are in breach of terms (I have excellent chance of success in court at recovering) and whose account I have forwarded to my debt collection agency for 'elevated enforcement action', that if they give notice of intention to defend then you will pay any legal costs associated with debt recovery?
A: We see situations where bookkeepers clients will dispute the quality of the work they have done and refuse to pay for the services provided. The dispute may be genuine or contrived to avoid payment of the account. If you decide to persue legal action against a client to recover the debt, the client counter claims or give notice of their intention to defend the action and the insurer has legal opinion that there is a high probability of success against the client the policy will cover the legal costs.
- the $500 or so I will have to forward the debt collector just prior to commencing legal action you will reimburse me?
A: Any fees paid to a debt collector are not covered by the policy so before incurring those expenses it may be worthwhile obtaining initial legal advice especially if your client is disputing the quality of the services provided.. However before you do any of this , give our office a call and we will guides you through the steps that should be followed. It might even be worth lodging a potential claim circumstance with the insurer and get an initial opinion from them. Lodging a potential claim circumstance, will not usually affect any renewal terms or continuance of cover
How would this work if the account terms stipulated the client is liable for legal costs.
A: Again, if you incur legal costs and the insurer has legal opinion that there is a high probability of success against the client the policy will cover the legal costs.
If your client is successful in disputing the quality of the services provided these terms may have no legal effect. If they are not successful then you may be successful in recovering your legal expenses from the client but this will depend on how legally enforceable the legal cost clause is. Prior to any significant legal costs being incurred by yourself,we would lodge a claim circumstance with the insurer A/Ask for their opinion B/ Get their agreeance in writing as to what costs they are prepared to accept. If they agree to cover legal costs, and down the track there is an opportunity to recover from your client ,then it is a bonus for the insurer
Answers provided by IME