Some Common Professional Indemnity Pitfalls

What's Next, written on an yellow sticky note pinned on a cork board

Many of you will have professional indemnity insurance – and for many of you it will be a requirement of your membership to a professional body. But how many of you are aware of the specific terms of the policy and what action you can and cannot take if and when a complaint is made?

Hopefully, you will never have to deal with a claim or dispute but, if a client makes a complaint, there are certain steps that you must take and certain things that you must not do, in order to ensure that coverage is granted under the policy. Failure to follow the procedures set out in the policy could lead to coverage being rejected – an expensive oversight for many.

Below are a few things to take into account if a complaint is made against you:

  • Notification: Most of you will know that you have to report a claim but, under most Professional Indemnity policies, you must also report any circumstance that is likely to or may give rise to a claim. This means that, under most policies, even a complaint made against your company should be reported under the policy;
  • Don’t admit liability: This may be difficult, especially where you know you have done something wrong, but admitting liability can invalidate cover so make you that you don’t make any admissions without authority;
  • Carrying out remedial works: Again, it might seem obvious to some however, a familiar situation in the construction industry occurs when someone carries out works that are found to be defective and require urgent attention. The action taken by many is to address the problem first and notify the matter to their insurers afterwards in order to recover the monies spent to rectify the problem. However this can cause a number of problems because, if the works weren’t obviously caused by negligent design (and may, for example, have been caused or contributed to by bad workmanship), insurers may reject cover or reduce it to reflect that they have not had the opportunity to investigate the actual cause of the problem.

This is not an exhaustive list of the steps that you must or must not take if and when a claim or circumstance is raised against you however the lesson, in short, is that you make sure you should know your policy.

If you have had your claim rejected by insurers or if you need advice following a complaint that has been made against you, please contact Helen Sutton on 0845 634 2601.

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