Professional Indemnity is what we call a “claims made” policy which means a claim is accepted under the policy if made against the insured and reported to the insurer during the period of the policy. This means the events that have lead to the claim may not have necessarily occurred during the policy period but could have been prior to the current policy year. So long as it occurs after the “Retroactive Date” set on the policy and so long as it was not a circumstance that was already known about.
This means that a claim will usually start with a “circumstance“. A circumstance will be when you were first made aware there could be a claim made against you. This is sometimes a subjective and contentious situation area and varies in interpretation from insurer to insurer. The safest thing to do is if you think you have a circumstance, then report it as soon as possible either direct with the insurer or through us as your Broker.
Examples of a circumstance are:
While Courts will usually apply the “Reasonable Person” test if there is an allegation of failing to already report a known circumstance. It is best not to risk it and report anything you think may end up being a claim. If a claim does not eventuate, no harm done but at least the matter is locked in to that policy year.
If during the period of insurance you do notify a circumstance that may give rise to a claim then, because of the requirements of the Insurance Contracts Act that also triggers coverage under the policy. Therefore it is deemed to be a claim. Insurers rarely provide a definition of a circumstance but they do for a claim.
All you need to do is report the matter in writing to the insurer or via us as your Broker. Provide the name of the possible claimant, their allegations, and the period when the alleged matter took place. Insurers will usually then request you to complete one of their Claim Notification Forms. Alternatively it may be easier to download and complete the details straight onto the insurers form and forward it as soon as possible to them or us as your Broker.
This is important because the details will be fresher in your mind. If the claimant leaves the matter for a few years before taking further action, you will not have difficulty trying to remember what it was all about.
If employing staff, it would be a smart move to bring in a system or regular requests from staff either monthly or quarterly but most certainly before the expiry date of your current policy, asking them to declare whether they are aware of any possible circumstances or errors or omissions on their part unless otherwise already reported.
It is also a good move to educate your staff on the importance of reporting any such threats of an error or omission so they understand how they can avoid prejudicing their company’s position if a matter was reported late. Also promise no ramifications in their position if they comply with this request. After all, mistakes do happen. It is just a matter of how they are handled from there.
Although we advise to let your insurer know as soon as possible, unless you have sent such advice through us first, we may not always be informed by insurers that you have reported a matter. So let us know too.
We will then monitor the matter and make sure that you receive the best possible assistance or result from your insurers. It is often said that a true test of an insurer is when you come to make a claim but you need an expert on your side should something not go the right way.
We will support, negotiate and advise on your claim through out its life span and make sure you receive the right claims outcome.