Missed Deadline: Consultant Has to Pay 10,000 Euros in Damages
When applying for funding, there are often not only various regulations and documents to be submitted, but also deadlines to be met. The latter was the downfall of a freelance consultant who was supposed to apply for funding for a software company's project. When he missed an important deadline and his clients lost out on a large chunk of the funding, they demanded the consultant return the money.
Consultant Hired to Apply for Funding
Many companies seek professional help when applying for funding and hire freelance consultants. This was the case here: a software company wanted to apply for funding from the German Ministry of Economics to support high-tech projects. To do this, the company hired a freelance consultant who specialised in obtaining funding.
At first, everything looked fine: The consultant checked the project specifications and came to the conclusion that the chances for funding were good. The client and the consultant then signed a contract and the freelancer started to prepare the application. Initially, things went well, but then the consultant made a serious mistake: he missed the deadline for submitting the form.
Consultant's Error Leads to Less Funding
The problem was that the funding programme was due to expire at the end of the year, so the relevant authority insisted that the document be submitted on time and would not tolerate any delays or late submissions. Although the document was not crucial for the grant to be approved, the amount of funding was reduced and the consultant's clients lost out on around €10,000.
Clients Demand Compensation
However, the company is now demanding that the consultant repay the 10,000 euros in subsidies lost as a result of the freelancer's mistake. From an insurance point of view, this is a financial loss - i.e. a purely financial loss (10,000 euros less funding) suffered by the consultant's clients as a result of his mistake (submitting the form late). Fortunately for the consultant, this type of loss is covered by professional indemnity insurance through exali.
Liability Risk of Omission
As a consultant, you are not only liable for what you may do wrong, but also for what you do not do, as this damage event illustrates. An omission is also a professional error for which you can be held liable. In this article you will find out what other business risks you face as a consultant and how you can protect yourself from costly claims: Top 3 Business Risks Freelance Consultants Should Know About
Professional Indemnity covers damages
Luckly for the consultant, he had taken out Professional Indemnity Insurance through exali. So the freelancer contacted exali's customer service and described the case to one of our insurance experts. The expert took down the details and after a short review forwarded the case and all relevant documents to the insurer who agreed to pay the claim, minus the contractually agreed deductible (in the case of Professional Indemnity through exali, this is €250 with financial loss).
Daniela has been working in the areas of (online) editing, social media and online marketing since 2008. At exali, she is particularly concerned with the following topics: Risks through digital platforms and social media, cyber dangers for freelancers and IT risk coverage.
In addition to her work as an online editor at exali, she works as a freelance editor and therefore knows the challenges of self-employment from her own experience.