When a Pre-Claim Becomes a Claim

What should my firm do if a pre-claim becomes a claim under the professional liability policy?  This does happen from time to time but insurance companies will do everything they can to prevent an actual claim from happening.

First it is good to understand what a pre-claim vs. a claim.  Pre-claim is there have been some rumblings of an issue with the project but there hasn’t been an actual demand made.  Here is a definition of a pre-claim:

Pre Claim Assistance and Prevention Expense

The Insurer will, at its sole discretion, pay all fees, costs and expenses which an Insured incurs in the investigation and mitigation of any potential Claim reported by the Insured In accordance with Section V. (B) Notice of Claim provided that said fees, costs and expenses are authorized and incurred prior to the date that a Claim is actually made. Any fees, costs and expenses incurred after the date that a Claim is made are subject to the Limit of Liability and Retention sections of the Policy.

Were as a claim is if there has been a demand from your firm.  This doesn’t always have to be in writing but typically it will be.  Here is a definition of a claim:

“Claim” means:

(1) a written demand seeking monetary , injunctive, declaratory or other non-monetary relief;

(2) a civil proceeding, including an arbitration or other alternative dispute proceeding, commenced by the service of a complaint, filing of a demand for arbitration, or similar pleading; or

(3) a request received by an Insured to toll or waive the statute of limitations or other bars against the filing or maintenance of a lawsuit or arbitration proceeding seeking Damages against, or services from, an Insured.

If a claim is made and it is already in pre-claim status, your firm will need to notify your insurance company right away.  The pre-claim will already have a claims representative and maybe even an attorney.  Notify both entities and provide the additional documentation requested.

Review your firm’s professional liability policy to understand the pre-claim vs. claim.  If your firm has any questions please call, or email, your Professional Underwriter agent for assistance.