When an issue first emerges, it rarely arrives labelled as a claim.
A dissatisfied client, a regulatory enquiry, an allegation against a director, or the discovery of a professional error may seem manageable in isolation. However, situations like these can quickly escalate into costly disputes, investigations or litigation.
Knowing when to notify insurers, and involving them early, can make a significant difference to both the outcome of a matter and the availability of insurance cover.
Professional Indemnity (PI) and Directors' & Officers' (D&O) insurance policies are typically written on a claims-made basis. This means that cover is triggered by when a claim, or a circumstance that could reasonably give rise to a claim, is notified to insurers rather than when the underlying event occurred.
This distinction is important. A delay in notification can have implications for coverage, even if the issue itself occurred during the policy period.
In reality, policyholders should notify insurers as soon as they become aware of any circumstance that could reasonably lead to a claim in the future. This might include:
Notification is not simply an administrative requirement. Early engagement gives insurers the opportunity to become involved at a stage when they may be able to help manage the situation effectively.
Policyholders should avoid admitting liability, agreeing settlements, appointing advisers or incurring significant defence costs without first consulting their insurers. Most policies require insurers to have the opportunity to participate in decisions relating to the defence and resolution of a claim.
By engaging insurers early, organisations can ensure they remain aligned with policy requirements while benefiting from specialist expertise when it is most valuable.
Many organisations are concerned that notifying a claim means losing control of how a matter is managed.
While insurers may have preferred legal panels and specialist advisers, it is often possible for clients to continue working with their existing advisers, subject to insurer agreement. Early discussions can help establish the most appropriate strategy while ensuring coverage remains protected.
At Price Forbes, our dedicated in-house claims team supports clients throughout the claims process, from the early identification of a potential circumstance through to resolution.
We work closely with clients to provide guidance on notification requirements, claims strategy and insurer engagement, helping navigate what can often be complex and sensitive situations.
The key message is simple: if there is any doubt, notify early. Raising a potential issue with insurers at the outset can play a critical role in protecting both your coverage and your position should a claim develop in the future.
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