Pre-Claims Assistance for Professional Liability

The first indication that a claim may be made against your firm may come long before a demand for money is made.  It may be that your client is dissatisfied with your services and refuses to pay for services.  Requests for documents or to testify on a client’s behalf may be an indication that you are a target of a claim.  It is important that you inform your agent and/or carrier so that they can begin working on your behalf to try to head off litigation.

Many policies offer free pre-claims assistance.  Costs incurred through pre-claims assistance  are not viewed as a loss during the underwriting process, nor will the reduce your policy limit.   Many times these pre-claim cases are closed for very little money and never become a full claim.   If your policy provides free pre-claim assistance you should use it as soon as possible. Take advantage of the specialists your insurance carrier provides.  They have seen many different scenarios and know how to handle certain situations to avoid a full blown claim.

Pre-Claims Example:  A pre-claims situation arose when a tugboat struck a fender system that was in place to prevent boats from striking a bridge. There was no damage to the bridge, although the department of transportation (DOT) claimed in excess of one million dollars in damage to the fender system. Our policyholder, the civil engineer, had not designed the fender system, but had conducted inspections prior to the collision and had designed a rehabilitation program for the fender system, which included replacement of deteriorated timbers and additional protective measures. The engineer performed his services on behalf of the state DOT, which was the plaintiff in the underlying lawsuit against the tugboat company.

The engineer received a subpoena from the tugboat company to produce the engineer’s records on this project. An attorney was retained to assist the engineer with the production of records. In addition, because the engineer’s contract with the DOT required the engineer to obtain written permission prior to disclosing any documents to any third parties, the attorney also filed a Motion for a Protective Order to either preclude the defendant from discovering the engineer’s documents, or, if the court declined to grant the protective order, an order requiring the disclosure of
the documents despite the confidentiality agreement. The information in the engineer’s files that provided the most benefit to the tugboat company were the reports of severe fender rot prior to the collision. The tugboat company used this information to argue that the DOT’s request to the tugboat company to pay for a new fender system was unjustified because the fender system was already in need of replacement when the collision occurred. No claim was ever made against the engineer and the file was closed with $12,200 paid in pre-claims expenses.

For more information please contact your Professional Underwriters, Inc. agent or contact us at puimich@profundewriters.com.  To request a free quote click here.