The High Court has sent a clear warning to all professionals who buy or are required by law to carry professional indemnity (PI) insurance, to ensure they notify their insurer of any situations that might give rise to a claim.
In a recent high-profile case that hit the insurance headlines, HLB Kidsons vs Lloyds Underwriters, the plaintiff’s PI policy was ruled ineffective as it had failed to notify the insurer soon enough after it became apparent that a claim might arise.
Once an insurer is aware of a potential problem, then any resulting liability will be covered by the insurance policy should a claim arise. It is a persistent myth that if you notify insurers of problems or potential claims that this will adversely affect your premium. This is simply not the case with PI and, without adhering strictly to the claims notification requirements of a policy, a construction professional might even find their cover void when they come to make a claim.
The question we are most often asked by clients is how to know when a situation warrants notifying a claim and, if it does, when to do it. Our advice would always be – if in doubt contact your broker and notify the claim. It will not affect your premium, and it could save you a lot of money and heartache.
Matt Farman, Howden Insurance Brokers