Businesses buy insurance hoping they will never have to use it. However, there may come a time where you will have to notify your broker of a claim, or a situation that may emerge into one. Many businesses do not know that informing your broker of an error or circumstance, regardless if it will turn into a claim or not is important. Knowing when and how to correctly report and notify a claim or circumstance to your broker is imperative to the effectiveness of your insurance policy.
Your obligation to notify both claims and circumstances which may result in a claim can be demanding. The responsibility is on you to ensure that you notify and discuss the matter with your insurance broker within the set time limit set in your policy and in line with your policy terms and conditions. It is usually simple to identify a claim as there will usually be a clear indication from a claimant of their intention to make a claim against you. You will often be given a clear allegation of negligence pointed at you and where possible, will establish some form of actual or potential loss.
What is a circumstance?
According to Discover and Do, a circumstance is a possible error or instance that you are aware of, that in the future could become a claim. It is important that you don’t mix up a circumstance to a situation that can be open to interpretation. It is important to make it clear that there are facts that could lead to a claim and that you may suffer financial loss.
- An intimidation by a third party or client, whether express or implied, of an intention to claim against you. This may be a remark in a telephone conversation or meeting.
- Criticism of your performance where it may result in financial loss
- Your discovery of a service or action provided by you which may fail to meet the standards required and could cause financial loss, even if your client is unaware of the fault.
If you were to believe that an error or certain action is likely to evolve into a claim in the future, it is important to notify your East West broker immediately. This is a complicated requirement by the fact that policies require a circumstance to be notified in the same period of insurance, in which the management team first became aware of the incident, for that claim to be covered.
When should you notify?
There is no specific deadline on when you need to notify your broker of a circumstance. However, we would strongly recommend that all notifications are made within a 14-day period of discovery.
What to NOT do without your broker’s permission
- Admit liability
- Take any action which could bias your broker’s position or their ability to investigate the claim
- Enter into claims correspondence with your broker’s approval or knowledge
- Settle or offer to settle
- Disclose your broker’s involvement or details of your insurance policy
When notifying your insurance broker, the notification should capture all circumstances in respect of which you have an awareness of the possibility, however, know that a claim might arise. You should also make sure when notifying your broker that the issue is not vague or imprecise, give your broker a clear understanding what the nature of the potential claim is.
We will represent your interests and will attempt to guide and support you through the whole claims process. Generally, a lawyer will also be appointed and we will defend the claim on your behalf. Finally, our claims team will also represent your interests, assess the claim and interpret your policy coverage. If you in any doubt as to whether an incident is notifiable, that you contact your dedicated broker for advice.
Contact the team today: