Centor Insurance and Risk Management Ltd

It is quite likely that the Professional Indemnity insurance premium is one of the largest single outgoings a professional organisation will incur. It is therefore important that all steps are taken to maximise the benefit afforded by this cover by following all necessary requirements of the insurance contract, and to avoid invalidating the insurance by non-compliance. 

Professional Indemnity insurance policies are written on a “claims made” basis. This means the insurance policy that responds to the claim is the one in force when the notification is made, and not the policy which was in existence when the alleged error occurred. It is therefore vital that notification is made as soon as you are aware of any circumstance or any claim that is being, or may be, made against you. 

It is extremely important to distinguish between a “claim” and a “circumstance”. The former is usually relatively easy to identify, but often there is a failure to recognise the latter, resulting in policy disputes with insurers. As a rough guide, a claim arises where there is an indication from a third party to you of some discontent which will, or may, result in an expected remedy from you. A circumstance is far less obvious, but basically arises where you become aware of an occurrence or problem, where there is the potential for you to be involved by way of remedy, but no formal claim or actual allegation of negligence has been made to you.

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 that you should follow these following basic requirements on each occasion: 

• Immediately notify any claim or circumstance as soon as you become aware.
  
  
• 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 or any offer of settlement to any third party without specific consent from your insurers (neither should the involvement of your own insurers be disclosed).
  
  
• Once notification has been given, ensure you co-operate fully with insurers or their representatives. 
  
  

The above noted comments do not substitute anything contained in your own policy, but should be used as a reminder of what is required of you. You should always refer to your policy and/or seek advice from your usual advisor if you are unsure or need clarification.   

If you have any queries concerning this topic please do not hesitate to contact David Jacobsen (Claims Manager).