Employees can be found personally liable for professional advice given on behalf of their employers, following the House of Lords decision not to allow an appeal in the case of Merrett vs Babb.

The appeal had been sought by a surveyor, John Babb, who, after the insolvency of his employer, found himself personally liable for a mortgage valuation he had made seven years previously.

Employees will be particularly vulnerable where their company has ceased trading and has no run-off cover or is under insured and cannot meet the full claim.

Another case that could be affected is where the company cannot get indemnity from its professional indemnity insurers as a result of a coverage dispute.

In the Court of Appeal case earlier this year, it was stressed that employees should ensure their company's insurance covered them personally.

In addition, employees needed to find out whether they were still covered after their employment ended, and, if not, to take steps to obtain personal insurance.

Commenting on the decision, general counsel at Markel syndicate 702 at Lloyd's, Penny Whitwell, said: “Employed professionals should never assume their firms' professional indemnity policies will respond in such situations.

She added: “Now would be an opportune moment for them to consider whether they should purchase their own individual policies, separate and distinct from that of their employers.”