When you take out an insurance policy the hope is that you’ll never have to use it. However, the time may come when you do need to make a claim, and you need to know how to do it. Your professional indemnity insurance is in place to protect your business in the event that a client or similar alleges a problem in your work which causes them a loss of earnings or some other kind of financial loss. Your public liability insurance will cover the compensation as well as any legal fees, in the event you have to use it. Here we’re looking at the process of making a claim and how it may come about.
Who is making the claim against you?
Absolutely anybody can theoretically make a claim against you but it’s most likely to be a client. A claim will usually come about because a client is genuinely dissatisfied with your work, there has been a major mistake or you haven’t delivered what was agreed. In every instance the client is likely to allege it was your fault they lost money.
As mentioned, a third, unrelated party could also make a claim against you and this is usually due to issues such as defamation or intellectual property theft and is much less common.
When can you make a claim on your PI Insurance?
Whenever anybody makes an allegation that you have been negligent or not delivered what was promised, you can contact your insurers. You may be accused of a specific allegation such as breach of contract or misrepresentation by a client or you may find that a competitor alleges you have duplicated or copied their website content. In both instances, you can involve your public indemnity insurers. It is also important to remember that whether the allegations are true or not, your insurance should cover you.
When should you contact your Insurer?
Insurance companies are not usually fans of being surprised so the sooner you can provide them with as much information as possible about the situation, the sooner they can get to work. Leaving it too long and hoping it sorts itself out can lessen the chances you have of your claim being paid out. Before the claim is even escalated, it is worth contacting your insurer for advice.
How will your claim affect your insurance?
If you prove yourself to be diligent and regularly contact your insurance company to warn them of potential claims, then you shouldn’t see an increase in your premium. They should recognise you are simply being a cautious and careful businessperson. However, if your insurer does have to pay out multiple times this doesn’t reflect quite as well and you may find both your premium and your excess increase. In the worst case scenario, you may find your insurer withdraws your cover, but this isn’t common practice.
Running your business without professional indemnity insurance is a huge risk as you could find yourself owing money which you simply don’t have. It’s particularly important for start-ups and small companies who may not have a significant amount of working capital.
To get a professional indemnity insurance quote simply click here.