Making a professional liability insurance claim is a straightforward process. Usually, you have to:
- Contact your insurer or agent.
- Read your policy.
- Confer with your agent.
- Gather records and document all communications with your client.
Dissatisfied clients sue. It’s a fact of business. Claims can arise for a variety of reasons, some justified, some not. Client may seek a way to recoup losses and you are a obvious deep pocket. You need to defend your practice and the first step is to make a claim on your professional liability insurance.
The following is a step-by-step overview of the process.
Claim Step 1: Contact your insurer or agent.
Even a potential claim should be reported to your insurer, or at the least it warrants a conversation with a representative from the company. Early notification allows for early intervention and remedial action. It also preserves your rights to coverage and allows the insurer to assign counsel who can provide a review of the issues.
Timeliness is critical and may also attract certain coverage benefits, like a reduced deductible or subpoena response assistance.
Conversely, failure to notify your insurer can prejudice the defense of a claim and may cause a denial of coverage due to late notification.
Claim Step 2: Review your policy and pertinent details.
Your professional liability policy (sometimes called an errors and omissions or malpractice policy) contains conditions and instructions pertaining to claims. Get familiar with your policy. Make sure you have a current copy of the policy when notifying the claim as it contains certain details (like the policy number) that you will need when you begin working with your insurer or agent.
Your insurer will need to know…
- Your name.
- Address, Email and telephone number.
- Business name.
- Policy number and type of coverage.
- A narrative description of the claim.
Your insurer will need to ascertain the date you became aware of the incident that gave rise to a claim. This impacts their evaluation of the coverage. Of course, your policy may be subject to a deductible which may be payable relatively early in the process.
CPAGold™ uses a specific claim notification form. Go here for a copy.
Claim Step 3: Ask questions.
Prepare a list of questions to ask your insurer. For example:
- Is there a time frame in which to file a claim?
- Is the situation covered?
- What are the basic terms of coverage?
- How will the insurer respond to a lawsuit?
- Who is the primary contact at the insurer?
- What is the next step and the process?
You may need the assistance or your agent, or in extreme circumstance, a lawyer.
Claim Step 4: Keep detailed records.
Keep detailed notes of your interactions with the insurer, especially letters, emails and telephone calls. More importantly, keep accurate records of any communications with the dissatisfied client, including any visits to your office.
To reiterate, document all contact between:
- You and the client.
- You and your insurer.
That includes conversations that took place in person, on the phone, or over email. Every interaction can potentially support your defense. Everything MUST be in writing. Also, make copies of everything you send to the insurer.
Claim Step 5: Responding to the claimant.
Your insurer or assigned defense counsel will guide your on how to respond. Your options may be to:
- Answer the claim. Respond to the allegations of the claim.
- Try to dismiss the claim. If the lawsuit is frivolous, defense counsel may seek to a dismissal.
- Countersue. You can counter-sue the client.
- Settle the claim. Your insurer may want you to settle with the client out of court to avoid drawn-out, costly litigation.
- Do nothing. If the dissatisfied client hasn’t actually filed a lawsuit, your insurer might recommend this course of action.
Claim Step 6: Relax.
If you have adhered to the recommended steps you should be prepared for any claim filed by the dissatisfied client. And you will be protected by the substantial resource and expertise of large financial institution.
Jorgensen & Company are not attorneys and do not offer any form of legal advice. Consult with appropriately qualified local counsel for more assistance. Rickard Jorgensen is President and Chief Underwriting Officer for the CPAGold™ program and may be contacted at (201) 345 2440 or firstname.lastname@example.org