In episode 5 of Unsure? Insure! we look at when you should contact your insurer.
It’s a common misconception that the only time you should contact your insurer is when lawyers are banging on the door because you’re being sued. This isn’t true.
It’s a good idea to involve your insurer before things have reached this stage. Usually there is an indication a project is unraveling or a client relationship is breaking down—when you've made a mistake in your work or received a complaint from a client. That’s the point you should contact your insurer.
Professional Indemnity Insurance
With professional indemnity insurance, you should contact your insurer as soon as you’re aware of any circumstance which may give rise to a claim.
What does the insurer consider a circumstance? This could be a complaint or criticism from a client, whether it’s an email from an irate customer or a phone call from an unhappy client. A circumstance could also be a mistake you’ve made in your work that could lead to a claim.
A claim—from the insurer’s perspective—is any written or oral demand made against you for compensation. This may be monetary or otherwise.
At the first inkling something has gone wrong you should contact your insurer. Perhaps you’ve accidentally deleted a client’s website or your SD card is faulty and has wiped the photos you've taken at a wedding (both real examples!). You’ll want to notify the insurer.
Maybe your relationship with your client is suffering. Client relationships breaking down is where most of our professional indemnity claims stem from.
Whilst there might be no claim at this point—as in nobody has threatened legal action or claimed damages—the insurer will assess if there’s anything they can do to prevent the situation from escalating.
Legal Expenses Insurance
Legal expenses insurance works a bit differently. It provides some assistance before you have to make a claim.
You have access to a legal advice helpline you can use to speak to a legal expert at any point. This is for general queries arising from any business related matter, including debt recovery and contract disputes with clients, tax enquiries and general legal matters.
With all of that said, if in doubt about whether it’s a situation worth worrying about, contact your insurer!
To recap, when should you contact your insurer?
- Contact your insurer if there’s a circumstance you’re aware of that could lead to a claim. A circumstance could be a complaint or criticism from a client, or a mistake in your work
- Your policy will be able to help you when you’ve received a demand for compensation from a client or a threat of legal action, whether that’s written in an email or over the phone
- At this point your insurer will provide legal experts to manage the situation, negotiate with the client and cover any compensation you may owe
- If you want assistance before a situation has escalated, consider using the legal advice helpline as part of your legal expenses insurance
- If in doubt, contact your insurer. They are there are help