October 3rd, 2019
Do you know what to do if you are faced with the likelihood that you made a mistake that could result in a professional liability claim being made against you or the possibility of one? Most professional liability insurance policies have very specific requirements for the reporting of claims and potential claims. A claim must be made against you and reported to the insurance company during the policy period. In many policies, claims must be reported immediately. Reporting requirements for potential claims or circumstances in professional Liability Insurance policies now have a similar urgency. Potential claims include facts or circumstances that you become aware of that might ultimately evolve into a claim.
Because potential claims often result in actual claims, insurance companies have now added stricter reporting requirements for potential claims. Often, potential claims must be reported during the policy period in which you first become aware of the potential act, error or omission. Be aware of your reporting obligations under your professional liability insurance policy. Failure to report a possible claim timely could mean before your current policy period expires, and could forfeit coverage for a subsequent actual claim that is made against you in a later policy period. The insurance company may not have to prove prejudice to deny coverage for late reporting.
If you think you might be sued for an act, error or omission in your work, be sure to promptly inform your professional liability insurance carrier. Reporting requirements have become more stringent. Potential claims and circumstances should be noted when first discovered, not just when they become actual claims. Failure to report in the timeline specified — especially before policy renewal — increases the chance of forfeited coverage. Assuming a long-term relationship with the same insurance company will protect you can lead to a claim denial and uncovered legal fees and judgements.
Know what requirements are stated by your professional liability insurance carrier regarding reporting of claims, circumstances and disciplinary actions. Then, talk with your insurer and broker about how to report such matters, including the time frame and necessary documentation. Your insurance company is there to dispute the merits of unfounded allegations or wrongdoings, but it’s your responsibility to follow their reporting procedures and timelines.
PLUS Journal, July, 2015.
Recent Cases Interpreting Notice Provisions in Legal Malpractice Insurance Policies as to Potential Claims
Cindy Wiedman, founded Wiedman Insurance Services, LLC (LiabilityPro Insurance Advisors*) August 1, 2014. Cindy is a Registered Professional Liability Underwriter (RPLU) and has designed and administered professional liability insurance programs over a 35-year career working for various insurance administrators in the Midwest such as Shand Morahan & Company, Kirke Van Orsdel, Marsh and Lockton Affinity.
*Currently working with investment advisory businesses domiciled in Iowa, Minnesota, Kansas, Illinois and Nebraska.