Making a professional indemnity insurance claim
No one wants to have a professional indemnity claim made against them but preparing for the worst by taking out a policy is sensible if you are in business to give advice or offer a service.
Having a claim against you is stressful and time consuming, but having help and support from insurance and legal experts can take away a lot of that hassle.
There may be a time when a client of yours feels there have been mistakes made when, in fact, there hasn’t but you will still need to defend yourself. However, making a slip is easily done, especially if you are juggling 101 things to do for clients every day.
Even the most careful business owners and managers can make a simple mistake, such as:
- Accidentally sending an email to the wrong person that reveals sensitive or confidential information
- A client must pay extra because you wrongly measured a building plot
- An employee lifts a business document from one designed by a rival company without permission
- You lose your laptop which contains files with personal information about clients and their finances
Many businesses ask when they should make a claim – and the answer is the sooner the better – as soon as you are aware of the problem. This will not affect your policy but allows insurers to be prepared and support you immediately without the problem escalating quickly.
Do’s and don’ts before making a claim
And here’s a list of what to do and not do:
- Don’t try to smooth things over with a disgruntled client. Tell the insurer about the claim straight away and let them help with the best way to resolve the matter.
- Take any steps necessary to prevent any further loss or damage – this includes recovering lost property.
- Do not admit or deny liability, have any discussion beyond recording details of the insurance claim nor make any payment before discussing the matter with the insurer.
- If the matter involves criminal activity, like theft or damage, speak to the police and get a crime reference number before reporting the matter to the insurer.
- Get your policy number, check the reference and details of your cover – including the dates on the policy to make sure it is valid
Sorting out a claim is more difficult if a business has acted before speaking to the insurer.
What happens when a claim is made
Some professional indemnity claims will not be paid because they are outside the terms of the policy.
- Any claim that is less than the policy excess
- A claim made under another professional indemnity policy
- A claim that was made before the start of the policy
- A claim arising from previous work unless the policy clearly states this cover is available
When you call, an experienced claims handler will be on the end of the line to explain what happens next.
A specialist lawyer or claims handler will consider the case and ask for any evidence, such as supporting documents.
The insurer will then negotiate a settlement with the complainant or their lawyer or look to defend and proceed to court.
This could involve an apology and compensation for a case involving defamation or infringement of intellectual property rights.
A professional indemnity policy will cover the cost of this action – and pay for any legal expenses.
Premiums start from £18.67* a month
*Based on £100,000 worth of cover. Plus insurance premium tax (IPT) currently at 12%