Professional Indemnity

The “claims made and notified” nature of professional indemnity insurance distinguishes it from the more common insurance situation where an entitlement to indemnity is “event” or “occurrence” based.

A claims made policy of insurance provides cover in respect of claims first made against the insured during the policy period regardless of when the event (usually a negligent act) giving rise to that claim occurred.

In any determination of whether a “claim” has been made for the purposes of a professional indemnity insurance policy, the starting point must always be the definition of “claim” in the policy. The application of that definition is critical in the context of “claims made and notified policies” because the date upon which the claim is made by the third party and notified by the insured to its insurer, may determine which (if any) policy responds and perhaps which insurer (if any) is on risk in respect of the claim. 

The answer to the question, “what is a claim?”, depends entirely upon the context in which the word “claim” is used. In the context of a professional indemnity policy, it is sometimes difficult to tell whether a third party has made a “claim” against an insured or has merely intimated a possibility that it may hold the insured liable for some realised or yet to be realised damage.

Professional indemnity insurance is a highly specialised class of insurance and many of the issues that arise and must be considered in professional indemnity insurance can only be efficiently considered and dealt with by lawyers who have a specialisation in the area.