Claims

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How do PI policies respond to a claim?

Professional Indemnity policies are liability policies and so respond when an insured is aware of a circumstance or a claim that may be made against them.

The claim does not have to come from a party for whom the insured is working; it can be brought by anyone who believes they have suffered a loss due to the insured.

What is a claim, what is a circumstance?

One of the most common questions asked by insureds and brokers is what is a claim or a circumstance?

In the HCCI wording we actually define a circumstance:

“shall mean any circumstance or state of affairs or event which might reasonably be expected to give rise to a claim against the Insured or a claim by the Insured under the policy.”

We understand as underwriters that in daily lives clients will moan and complain to their professionals, but at what point does moaning become a claim? There is no definitive answer; each case needs to be judged on its own merits. Our advice would always be to contact the HCCI Claims team who can then consider whether this is something which an insured should formally notify under their policy.

What if the insured doesn’t want to notify?

Some insureds are concerned that if they notify a circumstance or claim then their premium will increase. If insurers pay out on a claim then it is possible they will load terms at the subsequent renewal if they feel the individual risk now has a greater exposure than first perceived. However, a number of professions in particular Architects and Surveyors always have a high number of notifications and so an experienced underwriter would expect to see a number of claims and circumstances being notified. This will not cause the underwriter to load the premium unless they feel the risk has a greater exposure.

How do PI policies respond to a claim?

Common features of PI claims

Physical Evidence - A common feature that runs through most PI claims is the lack of physical evidence to support an Insured’s version of events. When a claim is first made against an insured you need to collate all the information and the facts so that a decision on defending the claim can be made. This can only be done if the Insured has a complete file which contains written documents setting out clearly their role in the project and any amendments made during the project. If these documents are not available then the claim becomes much harder to defend and ultimately, should the claim go to Court, it would turn on whom the judge believes. Having the physical evidence to hand helps avoid such situations.

Contracts - A number of professionals enter into business relationships without a standard contract in place. The reason is that often both parties are well known to each other. Sadly, should one party lose a substantial amount of money the friendship is then forgotten. Not having a contract in place leaves a professional very exposed. The contract can protect them, not just by limiting their liability but also by setting out exactly what is expected of them and what work they will do.

Experience – Another common cause of claims is an inexperienced member of staff being allowed to undertake work, without being properly supervised. We have seen claims resulting in over £1M being paid out to rectify the work of an inexperienced member of staff. It is essential that an insured regularly reviews their working practices to avoid such situations.

Procedures – It is not uncommon for claims to arise due to a lack of procedures or a failure to follow the sign off procedures. Frequently staff work within authorities or limits of responsibilities. But during busy periods or work, these can get missed or overlooked. Frequently claims occur when insureds have failed to meet their usual procedures, or they have no procedures at all to ensure that work is done correctly.

HCCI Claims Handling

All PI claims are handled in house by HCC’s specialist Claims Underwriters in our Bridgend and London offices. We provide a bespoke service where each claim is allocated to a dedicated and experienced Claims Underwriter meaning direct access to a decision maker for Brokers and Insureds.

We have a panel of solicitors and adjusters who are able to handle the wide range of professions which we write at HCCI. Whilst they are able to provide legal advice they are also aware of the complexities in dealing with insureds and handling what are often sensitive issues.

To handle a PI claim successfully it is essential that the insured is on board as they have all the information and evidence. Where possible we will allow an insured to try and resolve any disputes with HCCI remaining in the background. We understand that often an insured’s reputation may be at stake, after all, the disputes are often with their clients and so the insured will know the client best.

If you have any questions regarding the HCCI PI Division claims then please contact the claims team by emailing mbowers@hccint.com or by calling 020 7680 2945.

Click here to download the Claim Form

Click here to complete online Online Claim Form