When to Notify Your Insurer of a Claim Against Your Professional Indemnity Policy?

In almost all insurance policies, the policy will contain a clause that requires notice of an event which could give rise to a claim or an actual claim to be given ‘immediately’ or as soon as possible’, but not later than 30 days.  These clauses are usually inserted under the claims clause and /or in the conditions.

Failure to notify the insurer timeously of an event or actual claim in terms of the policy wording is material to the Insurer’s business and constitutes a breach of the terms which you concluded with the Insurer.

Breach of this clause entitles the insurer to reject a claim and absolve itself from liability to pay your claim.  The Insurer does not have to prove prejudice, but merely that the Insured committed the breach of its terms.

Understanding the purpose of this clause…

One purpose of the clause is to guard against the Insurer making insufficient reserves for losses in its financials.  An Insurer needs to maintain solvency in terms of its FSB requirements.

Another purpose of the clause is to enable the insurer to test the genuineness of the claim within a reasonably short time of the occurrence of the loss and to ensure that immediate steps are taken to mitigate the consequences of the loss.

Failure to notify the insurer timeously of an event or actual claim in terms of the policy wording thus affects the insurer’s ability to do either of these.