Institute of Certified Bookkeepers
First Previous - Page 1 of 1 - Next Last

What would you like to know about PII? What questions?

  • Fellow in Practice
  • Practice Certificate
  • 455 posts
  • # 54263

In recent newsletters we have provided articles on:
1) When to notify your insurance company.
2) What is covered by your PII - the duties of a bookkeeper
3)  When to get and how the insurance company gets involved

What would you like to know about PII so that you understand why you are being insured ?

Edited at 06 Feb 2011 07:06 PM GMT

  • 172 posts
  • # 81769

A recent ICB newsletter made reference to the policy provided by MadeEasy having a Return of Professional Fee clause.

The newsletter stated :
We all have clients that push the boundaries regarding their payment for services that you supply. Often out of goodwill you continue to supply these services until you or they terminate the relationship. It is at this time that any payment from your client will not be forthcoming. After much chasing, you usually give up because the legal costs are too high to recover your outstanding fees.

The ICB preferred Insurance Policy includes an automatic benefit covering legal costs to chase up those outstanding amounts.

The legal costs are sub-limited to 10% of the Insured Limit. There are conditions; you must have commenced legal proceedings, your client has either given notice of their intention to defend the action or make a counter claim against you (in which case your Professional Indemnity kicks in) and the insurer considers there is a strong possibility of success. 1

--------------

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?
- the $500 or so I will have to forward the debt collector just prior to commencing legal action you will reimburse me?
How would this work if the account terms stipulated the client is liable for legal costs.

  • Fellow in Practice
  • Practice Certificate
  • 455 posts
  • # 81774

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

 

First Previous - Page 1 of 1 - Next Last
loading