How to make a professional indemnity insurance claim

In their last sponsored post PolicyBee explained the 7 golden rules to avoid a professional indemnity claim.

But sometimes, no matter how much care you take, the situation can arise.

So this week, they’re shedding some light on what happens when you do have a professional indemnity insurance claim:

They can be a bit of an unknown quantity.

You’ll notice we talk a lot about brokers. That’s because a) we are one and b) we’re assuming you use one.

All will become clear.

First things first.

The best advice we can give is: get in touch with your broker as soon as you think you have a professional indemnity insurance claim. Even if you’re not sure, it’s better to be safe than sorry. Don’t worry about being judged or penalised – you won’t be.

Importantly, your broker has way more experience of this sort of thing than you, and can tell very quickly if it’s anything to worry about.

Watch out for any of the following as they could all be early signs of trouble:

• A mistake or problem in your work.
• A complaint or criticism of your work, however unjustified.
• A refusal to pay fees you’re owed.
• A reasonable suspicion you have that someone in your team has acted dishonestly.

Failing to mention a potential claim as soon you’re aware of it can mean your insurer refuses to cover it. Brokers will fight your corner, but late notification is a common reason for insurers to turn down claims.

Do’s and Don’ts.

Once you’ve told your broker, there’s some small print it’s important you follow. Under no circumstances should you:

• Admit liability.
• Try to settle the claim yourself.
• Reveal your policy’s level of cover.
• Communicate with the person making the claim without your insurer’s approval.

Next steps.

Your broker will ask for more information. Quite a lot of it.

Exactly what varies, but as a minimum they’ll need all correspondence between you and your client (including copies of contracts), your honest opinion about your liability, plus any outstanding invoices.

They’ll take this information to your insurer (not literally) and go through it. Your insurer and your broker will then work together to find out if, and how, your policy covers what’s gone wrong. They’ll also come up with a plan of action for you.

If necessary, your insurer will appoint a solicitor to defend you. Don’t try to find your own. It’s a waste of money – your insurer knows specialist claims solicitors, and it’s a breach of your insurance policy. Your insurer is well within their rights to refuse your claim if you appoint your own solicitor.

How it ends.

Most legit PI claims are resolved by all parties agreeing some kind of compensation.

If the claimant won’t back down, however, it’s possible the claim will end up in court. If this happens, the legal guys usually battle it out between themselves, keeping you in the loop.

How long a professional indemnity insurance claim takes to resolve is difficult to predict. Even simple claims can last a month or two, and trickier cases will almost certainly take longer. Insurers sometimes like to err on the side of caution and keep claims open for a while, even if nothing’s really happened, just in case.

However long it takes, it’s important to remember that your broker’s on your side, always. It’s up to them to make sure your insurer looks for ways to help, not for ways to avoid paying.

If you ever feel things aren’t going to plan, you need some more information, or just a bit of reassurance, don’t be afraid to pick up the phone and talk to them. It’s what they’re there for.

With a bit of luck, you might find a professional indemnity insurance claim against your business isn’t quite the heart-stopping, ruinous nightmare you feared.

PolicyBee is a specialist professional indemnity and business insurance broker born in CEO Iain’s shed because he was so frustrated at how confusing and difficult it was to get business insurance. PolicyBee is independent, digital, and understand the problems a young, modern business has because it is one. Although it’s no longer run from the shed.

Do you have any questions about why home workers need professional indemnity insurance? Or about any other kind of insurance? Let us know in the comments and PolicyBee will answer them in future posts.

Or follow the links for PolicyBee’s down-to-earth advice on insurance for home workers, covering your home office equipment and why you shouldn’t have such a jaded view of small business insurance claims after all.