When should my design firm report a claim on a Professional Liability policy?

When should my design firm report a claim on a Professional Liability policy?  This can be a tricky question because not all answers are straight forward as to when to report a claim.

The most obvious answer is when you receive a notice of claim report the claim immediately to the insurance company.  This claim may come from your client’s attorney, directly from the client or in many circumstances by certified mail.  The notice of claim will have a demand for money or services with allegations of wrongful acts by your firm.  It is very important that your firm get the insurance company involved as soon as you receive the notice.

Other circumstances that are not as cut and dry are situations such as fee disputes, conflicts with GC and client, verbal threats of demands, and circumstances when your firm knows there is an error or omission on the project.

Fee disputes are problematic because your firm is simply trying to collect the money it is rightfully due.  First step to take is to refer to your contract and how fee disputes should be handled.  If it becomes a situation where the client won’t pay and stated that there was some sort of error or omission, report it to the insurance company.

Conflicts with the GC and client, this may be a wait and see type of position.  If the client starts asking for drawings or there is a subpoena for documents, that is a good time to get the insurance company involved.

Verbal threats of demands such as money or services can be difficult as well.  The best thing to do if in doubt is to get some feedback from your insurance company on how to proceed.

Circumstances when your firm has made an error get the insurance company involved right away.  It does happen from time to time and it is better to catch the error early and get it fixed rather than it turning into a full blown claim.

Most important when thinking about a claim, is when in doubt discuss the situation with your agent or insurance company to make a determination as to how to move forward.  As always, your PUI Agent is here to help, please call or email with questions.declarations page

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