Creatives are used to working to deadlines. Oftentimes clients have important launch dates to hit. It’s your job to not only ensure deadlines are met, but that the work you’re delivering is what the client expected.
Sometimes a deadline can be missed. Other times the work that’s delivered is less than the client anticipated.
Even if these situations seem out of your control, this can lead to unhappy clients. Unhappy clients is why you should have professional indemnity insurance!
We watched a situation unfold with one of our customers, a creative agency. They were hired to design a website with an important launch date.
After beginning work on the project, things started to go wrong. Fast forward to the launch date, the website was lacking important functionality and not fit for purpose. Having spent money drumming up buzz for the launch, the client wasn’t happy.
They claimed the website was missing important functionality, refused to pay the final invoice and threatened to involve solicitors if the agency pursued payment.
Fuether to that, they outlined additional expenses incurred by the lack of functionality. This included hiring new contractors to resolve the perceived issues, as well as loss of income due to losing those early customers.
So, now we have:
- An unpaid invoice
- Wasted money on a PR campaign
- Costs incurred with hiring new contractors
- Loss of income due to losing early customers
It’s not uncommon to see situations like this unravel. They start off with one hiccup (perceived issues with functionality), but grow arms and legs (new contractor costs, loss of income). Like most of the claims we’ve seen, it ends with the client relationship breaking down.
With insurance, the creative agency was able to get the help they needed.
Firstly, it was important to involve the insurer early. This meant they could prevent the claim from spiralling further and going to court.
Secondly, the insurer helped the agency communicate with their client to try and recoup the unpaid fees.
Ultimately, the unpaid invoice was settled by the insurer under the ‘Mitigation Costs’ clause of the policy. The insurer also provided the agency with an email to send to their client. This was to confirm that the invoice would not be pursued on the basis the project is considered at an end.
By getting the insurer involved early, further costs were avoided. The agency was put back in the same financial position after the loss as they were in before the loss.
This is one of many examples of why it’s important to be insured. Not only to have a team of legal experts backing you in scary situations, but to provide financial support should your business suffer a loss.