You’ve purchased Professional Indemnity insurance as part of your business risk management strategy. You’re secure with the limit of cover you have chosen. But are you aware of these five common rules that often throw Professional Indemnity claims off course?
Professional Indemnity Insurance is essential in today’s business environment and forms an important part of any business risk management strategy. It protects the professional person or firm from damages and legal costs as a result of an act, error or omission in their professional capacity.
But Professional Indemnity Insurance is complex and, when it comes to claiming, there are five common areas we often see clients being let down by their lack of knowledge on their PI policy.
- Duty of Disclosure
Professional Indemnity Insurance is offered on a claims made basis, meaning you must have a policy in place at the time you are first made aware of a claim or potential claim, or are first notified of circumstances that could lead to a claim. Consequently, as an Insured you have a duty to notify your Insurer as soon as you are made aware of a potential claim. If the policy renews and you have not declared a matter you were aware of, Insurers may again look to deny a claim. - Insured names
It is essential that all of your trading entities, and consequently those entities who could be drawn into an action, are noted as Insured(s) under the policy. - Professional Services
Again, it is essential that all of the services offered by the business are noted under the policy. This is key, as an Insurer could look to decline a claim if they are unaware of an activity carried out by the business that has led to a claim. - Vicarious Liability
For the sake of clarity you should always ensure, in conjunction with your broker, that the policy covers any potential liability you may incur on the part of the actions of consultants, sub-contractors and agents engaged by you to carry out your professional services for or on your behalf. - Continuity Clause/Date
Many policies carry a continuity clause which you may be able to trigger, in order to have a claim considered. This “continuity” will usually be limited by date (most commonly to the date of the inception of the policy) thus restricting its application. This is most important should you change Insurers at renewal, in which case your new policy will carry a limitation around the “continuity date” applicable to the policy which will most likely be limited to the day the new Insurer came on board.
We encourage you to discuss all of the factors above with your broker, who will be able to ensure that the policy you have in place provides you with the protection that your business needs.
As explained above, one of the most common potential problems we see when dealing with Professional Indemnity Insurance is your Duty of Disclosure and what should be notified to an Insurer. This, by its very nature, can be problematic for an Insured. In essence, any circumstance that you feel could, reasonably, lead to a claim should be notified to your Insurer. However, what appears reasonable to you may not be viewed as such by an Insurer, so the golden rule is…..”If in doubt, notify”.
At Whitbread, we pride ourselves in ensuring that all of our clients have a policy(s) tailored to their specific needs and we would be more than happy to discuss any aspect of the above in more detail and provide a ‘no obligations’ review of your current insurance program.
Feel free to contact us on either Ph 1300 424 627 or email info@whitbread.com.au
This brochure is not intended to be personal advice and you should not rely on it as a substitute for any form of personal advice. Please contact Whitbread Associates Pty Ltd ABN 69 005 490 228 Licence Number 229092 trading as Whitbread Insurance Brokers for further information or refer to our website.
