The Custodian Insurance Industry Blog

September 18, 2019

Mistakes NOT to make with your PI Insurance: the ticking clock

Your PI Insurance has your back. But no relationship is a one-way stream. That’s why your insurance needs certain favours in return for the cover they provide. So,in the event of a potential claim you need to help your PI Insurance out as much as possible.

Take a look at the example below…

Bob is a builder. Around two weeks ago he noticed cracks began to appear in his construction work causing a massive delay in the timing of the project. Bob’s client was extremely angry and threatening to sue.

Bob didn’t tell his insurer as he hadn’t been presented with a letter from a solicitor so didn’t think it would be an issue. Even when a claim form arrived Bob still didn’t tell his insurer!

What should Bob have done?

The most important thing your insurance needs from you is early notification. How can they have your back if they don’t even know there is a problem?

If you take a look at your insurance contract, it is likely that one of the terms is that you must notify your insurer as soon as possible if a claim is being made against you. So what does this mean?

When should you notify?

To be in safe territory you should notify your insurer as soon as possible. So what does ‘as soon as possible’ mean? Lets take a look Bob’s example.

The best thing Bob could have done is to notify his insurer as soon as the cracks arose and his client became angry.

The worst thing Bob could have done is wait until he had received the claim form and then still not tell his insurer!

So… as soon as you are aware of anything going wrong that could potentially give rise to a claim tell your insurer!

Even if nothing comes of it or you feel you have done no wrong, it is best for them to know as soon as possible.

What happens if I don’t notify?

If the term in your policy is classed as a ‘condition precedent’ this means your insurer can reject your claim. Not a risk worth taking!

What you SHOULD do…

  • Notify your insurer as soon as a circumstance occurs that makes you feel slightly uneasy, something has gone wrong or likely a claim might need to be made
  • Communicate this information to your employees and ensure they understand the importance of notificationand that they admit their mistakes to you
  • Never think that something is so small it may not cause a problem.

What NOT to do…

  • Not tell your insurer and hope that the problem goes away
  • Try to settle or admit liability of any claim without speaking to your insurer
  • Enter into proceedings or claims correspondence without your insurers permission.

If you have any questions regarding your policy or anything mentioned in this article why not contact us to see if we can help? Call 0207 648 4242 or email zahid@custodianinsurance.co.uk.

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