|
It is often said that
the Professional Indemnity insurance premium
is one of the largest single outgoings a professional
firm will have. It is therefore important that
all steps are taken to maximise the benefit
afforded by this cover by taking all necessary
steps required by the insurance contract and
to avoid invalidating the insurance by non-compliance.
All Professional Indemnity insurance policies are
written on a "claims made" basis. This means the insurance
policy that responds to the claim is the one to which notification
is made and not the policy that was in force at the time the alleged
error occurred. It is therefore imperative that notification is
made as soon as you are aware of any claim or circumstance that
may be made against you.
The distinction between a claim and a circumstance
is extremely important as many insureds can readily identify and
notify the former, but fail to recognise the later resulting in
policy disputes with insurers. As a rough guide, a claim arises
where there is a clear indication from a third party that they hold
you responsible for a particular problem and will look to you to
make reparation for any losses suffered. A circumstance is far less
obvious but basically arises when there is a dispute or disagreement
with a client over the handling of a situation but where no actual
allegation of negligence has been made.
In the event of you becoming aware of a claim or circumstance
it is important that you adhere to the terms of the insurance contract
in order to secure the full benefit of the policy. This means you
should follow the basic requirements, which are:
- Immediately notify any claim
or circumstance as soon as you become aware
of it.
- Ensure notification is made
during the period of the policy during which
you become aware of the claim or circumstance.
- Do not make any admission of
liability to any third party without specific
consent from your insurers.
- Do not make any offer of settlement,
including reimbursement of fees, without the
consent of insurers.
- Once notification has been given, ensure you co-operate
fully with insurers or their representatives.
As a general guide, if you are
uncertain whether a matter constitutes a claim
or circumstance, avoid any risk and notify the
matter immediately and let insurers decide whether
a situation is deemed notifiable or not. This
will avoid any potential coverage problems arising
from late notification.
DCS
5th Floor
Minster House
42 Mincing Lane
London EC3R 7AE
tel:
0870 839 0839
fax:
0870 839 0939
email
|
