Making a claim can be a stressful time, but understanding the overall processes, timelines and requirements on your part can significantly alleviate some of the stress. The process of making a claim will of course vary based on the type of insurance policy. Below, we’ll outline what to expect when making a claim under Professional Indemnity Insurance, and how you can minimise the stress of lodging a claim under Professional Indemnity Insurance.

Typically, Professional Indemnity Insurance (PI) is designed to provide cover in the event a client alleges your service or advice caused them some form of loss. However, this can manifest differently depending on the specific situation. In the event a client does take legal action against you or your practice, PI is intended to help cover the legal costs associated with defending you, as well as compensation you might be required to pay. Not all claims are as a result of civil action, in some cases you may be required to respond to an investigation or official complaint made to a regulatory body in relation to your insured professional service, in this case, you may require legal advice and assistance and still incur legal fees in having to respond to the regulatory body.

One of the most important features to keep in mind about Professional Indemnity Insurance is that you are required to notify your broker or insurer of a potential claim as soon as you become aware of it. This means that if you receive a notification advising of legal action or enquiry/investigation, you are required to notify your broker as soon as practical.

In some instances, there is a limited time frame that you may have to respond and it’s important to provide your insurer with as much time as possible to review the circumstances, speak with you and review your file and respond accordingly.

When you notify Aon of a Professional Indemnity claim, typically Aon will request you email through any documentation you have received, such as a letter of demand, solicitor’s correspondence, enquiry or investigation notifications. Once the information is provided, Aon will submit this to your insurer.

Your insurance company will review the information you provided in relation to the claim. At this point, however, it’s unlikely they will have enough clarity to confirm coverage immediately under your policy. That’s why you may receive a response from your insurer requesting further information and advising they’re ‘reserving their rights pursuant to the terms, conditions and exclusions of the Policy and at law’.

While receiving this response may be unsettling, especially if you haven’t been through this process previously, please be aware that this is standard practice to allow the insurer time to assess the details of the incident and claim.

At this stage, the insurer would also typically appoint a legal firm who will contact you to obtain the information necessary to determine indemnity. It is important to note that, whilst the insurer is considering indemnity, they will, in most cases, also take all steps necessary to protect you and to respond to the claim or Inquiry made against you. You may be wondering what is meant by determining indemnity….

Initially your insurer will making sure the following is in order:

• The allegation/legal action has been made against the insured on the policy.
• The allegation relates to services that are in scope of the profession and what was insured under the policy.
• That the policy is current – (please refer to information below on professional indemnity, claims made basis).

Once indemnity is confirmed, the Lawyer appointed will continue to assist you and manage the Claim or Inquiry as appropriate through to resolution. The granting of indemnity means that the legal costs that are incurred in responding to an Inquiry, or defending a Claim are covered. This also means that if any Compensation is agreed or ordered to be paid that the insurer will make those payments.

Bear in mind however, that you will be responsible to pay any excess applicable under your Policy and if there are elements of your claim that are not covered under the policy this would be explained by either the Lawyer appointed by the insurer, the insurer or Aon.

Indemnity and liability claims can vary in terms of the severity which can impact the time the claim will take to resolve, however its common for these types of claims to be open for many months, in the case of an Inquiry or, in some serious cases, a few years.

We mentioned above that the insurance company will check the policy is current when the claim is notified, this is because typically a professional indemnity policy is a claims made policy. Meaning that the policy must be active at the time a claim is made. In other words, it is not enough for the policy to have been active when the professional services were provided. It is, therefore, vitally important to have continuous professional indemnity insurance without any gaps to protect you in the event that a complaint or claim is made about you. A current policy can include a run-off policy, it’s important to understand the claims made basis of professional indemnity insurance and why you need run-off cover when you leave the industry or retire, to gain further insight read more here….

Although making a claim under Professional Indemnity Insurance can be a stressful time, understanding the overall process can make a big difference in your ability to navigate it. It is also at this time where you may see the true value of using a broker for your insurance, as the support and guidance offered by your broker can also have a huge impact on your claims experience. Ongoing due diligence on your part such as keeping your insurance updated and keeping adequate client records can also help ensure you receive the best possible outcome.