How to Claim Professional Indemnity Insurance

Receiving professional indemnity claims from clients is a stressful situation for business owners. But sometimes, the experience becomes more harrowing when problems arise with the insurance providers. Misunderstandings and errors can cause the insured to suffer from more losses.

If you are a beauty business owner, you must be well-informed of the process for claiming professional indemnity insurance from your provider. Knowing how to deal with legal claims can save you and your company from further inconveniences.

The Process of Claiming Professional Indemnity Insurance

The process of claiming professional indemnity insurance is simple. Just make sure to follow the steps below:

As soon as you identify circumstances that you think could possibly lead to a claim, notify your insurer right away.
Your insurance policy provider will advise you on what information is required from you at this point. Make sure to disclose all supporting information that your insurer requests.
Once your claim is approved, only then can your business settle the complaint with the client. The usual outcome is the compensation of the damages brought to the third party. This is covered by the professional indemnity insurance policy.

It may be tempting to try to settle any grievances with a client immediately by yourself, however doing so may only aggravate the issue and could lead to a customer lawsuit against you. As soon as you’re insured with a PI policy, it’s best to get advice from your business insurance provider and not engage in alternative dispute resolution with your client. Doing so may only lead you to more legal action and aggravate defence costs.

In cases where the claimants request a court proceeding, you have to coordinate with your insurer and lawyers as well. Trials are lengthy and expensive, but the legal costs should still be within the insurance coverage. Thankfully, professional negligence disputes rarely end up in courts.

Professional Indemnity and Duty of Disclosure

Communication is a vital part of dealing with liability claims made by your company’s clients. Keeping in touch with your insurers is, therefore, a requirement. This is considered as the Duty of Disclosure for your insurance policy.

What is a circumstance?

Most of the time, an experienced business owner would be able to predict that a customer will file liability claims. This prediction is grounded on the concept of circumstances, which are sets of facts that signify a potential claim.

One common example is if you or your staff provide incorrect advice to an unknowing client. Once the client becomes aware of the mishap, chances are high that a claim will be filed.

Another example that frequently occurs is when a client asserts that incorrect advice was given by you or your staff. Even if you disagree with the client, this would still count as a circumstance.

Why is it important to notify a circumstance?

A PI policy works on claims made and notified basis. As such, every potential claim should be notified to the insurer as soon as you first become aware of it. Keeping your insurer in the loop allows them to act on the matter right away, assist in the possible financial situation, and in many cases can result in finding a resolution before there is possible legal action.

What to do when notified of a circumstance?

What is Continuous Cover Clause?

There are instances when professional businesses fail to inform their insurers of potential circumstances known to the insured before the start of the policy period. As professional indemnity insurance is “claims made”, this would normally mean that those circumstances will not be covered should they lead to a claim.

However, a possible workaround is the Continuous Cover Clause. When invoked, the insured can still file for PI claims arising of a circumstance that could have been notified under a previous PI policy but for whatever reason was not disclosed. This clause can be applied to insured businesses which, without interruption, continuously hold a policy and were insured under a PI insurance policy at the time they first became aware of the circumstance that eventually gives rise to the claim.

Let Sparrow Insurance assist you in claiming your Professional Indemnity Insurance

Sparrow Insurance has experience in providing professional services when it comes to handling PI claims for a wide range of businesses in Australia. We have assisted beauty salons, cosmetic clinics, hair salons, to name a few.

We simplify the process of finding the right policy tailored for your business. And we make sure that if in the unfortunate event there is a claim made against you, that we support you with every step. So if you are looking for insurance cover, you are at the right place.

You can also request quotes if you’d want to add more cover to certain insurance products.

FAQs

1. How much will I have to pay for insurance policies?

The cost of each policy is crafted based on different parameters such as the size of the business, the services you provided, and the number of people covered. Requesting a quotation from us would give you a clearer idea of the insurance cost.

2. How long before I can claim my professional indemnity insurance?

Sparrow Insurance deals with PI claims as soon as they are filed by our customers. The entire process of claiming may vary from a week to a few months.

General Advice Warning

This advice has been prepared without taking into account the client's objectives, financial situation or needs.

Because of that, before acting on the above advice, the client should consider its appropriateness (having regard to their objectives, needs and financial situation).

If the advice is related to the acquisition of an insurance contract, the client should obtain a Product Disclosure Statement relating to the product before deciding whether to acquire it.

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