When you buy a professional indemnity insurance policy you enter into a contract with the insurance company. Like any contract there are rules which must be adhered to, some of which are very important...
Your Policy Obligations
One of the most important sections of the policy is the one which deals with the notification of a new claim or ‘a circumstance which might give rise to a claim’.
This clauses in this section can be quite demanding as the onus is on you to ensure that the claim is notified within the time limit set in the policy and that it is done so in line with the policy terms and conditions.
It’s usually quite easy to identify when someone is making a 'claim' against you as there will often be a clear indication from a claimant of their intention to claim compensation. This will usually take the form of a complaint or an allegation/s of negligence levelled at you stating their grievance or loss.
Identifying a ‘circumstance which may give rise to a claim’ against you is not always as straightforward but is nonetheless just as important. This could just begin as a dispute over fees, a complaint which doesn't specify a claim, or perhaps you spot a potential problem before your client is even aware of it.
When You Should Notify
Regardless of your own view on blame or liability, you must tell your insurer immediately you become aware of the problem or potential problem. Failure to notify your insurer can result in a dispute and a claim being rejected.
Unfortunately there’s no consistent approach among Insurers on the exact timing of notification provisions in policies. However, the wording is usually very strict and we therefore strongly recommend that all notifications are made within a 14 day period of first awareness.
What Not To Do....!
As soon as you are aware of the problem, there are a few things you must not do without the permission of your insurer.
- Admit liability
- Take any action which could prejudice your Insurers position or their ability to investigate the claim
- Enter into claims correspondence without your insurers permission
- Settle or offer to settle
- Disclose your Insurers involvement or details of your professional indemnity policy
Any breach of the policy terms and conditions can lead to a dispute with an insurance company so we strongly recommend taking time to read the claims conditions in your policy document.
For more information on claims and when to notify please read our Guide To Professional Indemnity Claims.