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(Details provided by Insurance Made Easy - ICB's prefered PI Insurance provider)
Unlike most classes of Business Insurance, Professional Indemnity works on a “claims made” basis. That is when a claim circumstance is notified to the insured and not when the event happened.
For example, you may have made a mistake three years ago and had not been made aware of it until this year. The claim would be covered by this year’s policy, not the policy you had three years ago.
The key issue is “When should a potential professional indemnity claim be notified”? and What is a Potential claim??
We all get cranky customers and the main determining point is, can your customer’s complaint be resolved without any lasting effects on their business?
If the issue is resolved satisfactorily and there is no anticipated further action required then it is unlikely to lead to a professional indemnity claim and so it is time to move on. Important to bear in mind though, is that if you were to get several complaints about similar issues, then there is a systemic problem that leads to the likelihood of a serious complaint being made and a claim for professional indemnity issued.
Why should you report any circumstances that may lead to a claim?
Simply because a claim is acknowledged when it is notified to you or when you consider it may lead to a possible claim down the track, this is then considered a potentially known event and should have been reported during the relevant current period of insurance.
What are the consequences of notifying a potential claims circumstance?
Virtually nil, there are no serious consequences; the bigger question is what are the consequences of NOT notifying your current provider of Professional Indemnity Insurance? The real risk is that if the likelihood of a claims circumstance was not reported, the insurer may decline the claim as it was a known circumstance at the time the policy was purchased or renewed.
For further information and advice relevant to your individual business, please contact:
Helga, Brian or Rowan on 1800 64 1260
Insurance Made Easy AFSL 285920
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