Late Notification
The insurer alleges that a claim or circumstance should have been notified earlier or during a previous policy period.
← Professional & Business Claims Defence
Professional Indemnity Insurance
Your Client Has Made a Claim. Is Your PI Insurer Now Questioning Cover?
Professional indemnity insurance is intended to protect a professional practice when liability claims arise. But sometimes the underlying negligence claim is only half the problem.
The insurer may question notification, the relevant policy year, a previous circumstance, the retroactive position, an exclusion or some other term of cover. Insurance Dispute Service can examine the professional liability claim and the PI coverage position alongside one another so that one dispute is not allowed to obscure the other.
30+ Years’ Litigation Experience
Insurance Coverage Analysis
Professional Liability Claims
Direct Access Barrister Support
Where Problems Arise
The insurer may accept the notification but still question whether the policy responds.
PI disputes are often highly dependent upon wording and timing. A professional may have maintained insurance for years yet still face an argument about which policy should respond or whether a particular term restricts indemnity.
Prior Circumstances
The insurer argues that the professional already knew of facts which could give rise to a claim before the current cover incepted.
Retroactive Cover
Questions arise about whether work performed before a stated retroactive date falls within the policy.
Policy Exclusions
The insurer relies upon an activity, work-type, project, territorial, regulatory or other exclusion to restrict cover.
Aggregation
Several allegations or claims may trigger arguments about whether they constitute one claim or multiple claims for the purposes of limits and excesses.
Reservation or Refusal
The insurer may investigate or fund the defence while reserving its coverage position, or may ultimately refuse indemnity.
Claims-Made Cover
The date of the original professional work may not identify the responding policy.
Professional indemnity insurance commonly operates on a claims-made basis. Professional bodies including ICAEW, RICS and ARB expressly describe their relevant PII arrangements in those terms.
This means that the policy in force when a claim is first made, or when a qualifying circumstance is properly notified, can be critical even though the professional work itself may have been carried out years earlier.
Professional Work
The advice, design, valuation or other professional service is
performed.
Potential Problem
Facts emerge which may or may not amount to a circumstance
requiring notification.
Claim / Notification
A claim is made or a relevant circumstance is notified in
accordance with the policy.
Responding Policy
The wording, timing, retroactive position and prior notifications
help determine which policy may respond.
Notification Matters
What was known, when was it known — and what did the policy require?
Notification disputes are rarely resolved by the statement “we told the insurer.” The actual wording and chronology need to be reconstructed.
A concern mentioned during renewal is not necessarily the same
thing as a valid policy notification.
01
What does the notification clause actually say?
The wording may distinguish between an actual claim and a circumstance which may or is likely to give rise to a future claim. The relevant threshold must be identified from the policy itself.
02
When did the relevant facts first emerge?
Emails, complaints, internal discussions, project correspondence, error reports and client communications may establish when the professional first became aware of the potential issue.
03
Was there actually a notifiable circumstance at that stage?
The existence of a problem does not automatically answer the policy test. The facts known at the relevant time need to be compared with the precise notification wording.
04
How was the notification made?
The recipient, content, timing and method of notification may all matter. Renewal disclosure and formal notification should not automatically be treated as interchangeable.
05
What later claim is said to arise from it?
Where a circumstance was notified previously, the relationship between that notification and the later claim may itself become an important coverage question.
Find the Responding Policy
The policy schedule is only the beginning of the coverage analysis.
Where insurance has been renewed over several years, the professional may need to reconstruct the insurance programme across more than one policy period.
That is particularly important where a claim develops gradually, the professional changed insurer, an earlier circumstance was notified or the current insurer alleges prior knowledge.
Do not assume that the newest insurer or the insurer covering
the year the work was done must necessarily respond.
The position depends upon the individual policy wording and
notification history.
Current Policy
Inception, expiry, insured entities, limits, excess and
endorsements.
Earlier Policies
Previous insurers, continuity of cover and earlier notifications.
Retroactive Date
Whether older professional work falls within the available
historical cover.
Known Matters
What claims or circumstances were disclosed before inception
or renewal.
Current Claim
When it was first made and how it relates to any earlier
circumstance.
What Is the Insurer Relying On?
A coverage objection should be broken down into its actual components.
“Cover is uncertain” is not an analysis. The insurer's position should identify the relevant facts, wording and consequences.
01 / INSURED
Is the correct person or entity insured?
Partnership changes, corporate restructures, former principals, subsidiaries or predecessor practices can make the identity of the insured important.
02 / WORK
Does the work fall within the insured professional activities?
The business description, definitions, endorsements and exclusions should be compared with the professional service which generated the claim.
03 / TIMING
Was the claim or circumstance notified within the required period?
The chronology should be tested against the notification provisions rather than judged simply from the eventual date of the formal Letter of Claim.
04 / PRIOR KNOWLEDGE
Did the insured know enough before the policy started?
The insurer may rely on prior circumstances or information provided at proposal or renewal. The precise facts known at that point need to be established.
05 / EXCLUSIONS
Does the exclusion actually apply to this claim?
The wording, factual allegations and true nature of the claim should be compared carefully before accepting that an exclusion removes cover.
06 / LIMIT
How much insurance is actually available?
Limits, aggregation, excesses and treatment of defence costs may materially alter the practical insurance available to deal with a substantial claim.
Reservation of Rights
An insurer reserving its rights has not necessarily refused the claim — but it should not be ignored.
A reservation of rights can allow the insurer to continue investigating, corresponding or funding aspects of the defence while preserving arguments about whether indemnity is ultimately available.
The important question is: what rights is the insurer reserving and what factual or policy issue is said to justify that position?
Insurer Reserving Its Rights →
Identify every policy provision relied upon
Do not treat the reservation letter as a single generic
objection.
Separate facts from assumptions
What does the insurer know, and what is it merely investigating?
Consider potential conflicts
The best liability argument and the best coverage argument may
not always sit comfortably together.
Understand the practical consequences
Who is funding defence costs, controlling strategy and deciding
whether settlement should be explored?
How Much Protection Is Really Available?
The headline limit does not always tell you the whole financial position.
A substantial professional claim can consume significant resources before liability is finally determined. The policy therefore needs to be examined not only for whether cover exists, but for how the available indemnity operates.
Limit of Indemnity
Is the limit each claim, each and every claim, or an aggregate
limit for the policy period?
Excess
How much must the insured bear and how does the excess operate
where several claims are involved?
Defence Costs
Are legal and expert defence costs within the limit, additional
to it or treated differently under the particular wording?
Aggregation
Does the insurer contend that several claims arise from the
same or related acts and should therefore be treated together?
Multiple Insureds
Does the same limit have to protect several individuals,
entities or project participants?
Settlement
What consent, control or cooperation provisions apply before
settlement or admissions are made?
Insurer-Appointed Solicitors
Having lawyers appointed does not necessarily mean the coverage issue has disappeared.
An insurer may appoint solicitors to defend the professional claim while separately reserving its position under the policy. The professional therefore needs to understand both the liability defence and the continuing insurance position.
Already Have Insurer-Appointed Solicitors? →
Has indemnity actually been confirmed?
Is a reservation of rights still in place?
Who is controlling the liability strategy?
Who is dealing with the separate coverage question?
Could the liability and coverage positions create competing interests?
Across Professional Sectors
The coverage wording changes. The need to understand it does not.
Professional-indemnity disputes can arise across very different professions, each with its own regulatory requirements, professional standards and risk profile.
Accountants & Tax Advisers
Claims concerning tax advice, accounts, transactions, reporting and other professional services.
Surveyors & Valuers
Valuation, surveying, property advice and related professional indemnity issues.
Construction Professionals
Architect, engineer, quantity surveyor and construction consultant claims.
Financial Advisers
Suitability, pension, investment and other financial-advice claims.
Insurance Brokers
Claims involving placement, underinsurance, disclosure and alleged gaps in insurance cover.
Other Professionals
Professional-negligence claims where the liability and PI coverage positions need to be considered together.
How We Can Help
Analyse the policy alongside the claim it was supposed to protect you against.
A PI coverage dispute cannot always be understood by reading the insurer's reservation or rejection letter in isolation. The underlying professional claim, insurance chronology and policy wording may all need to be brought together.
01 / POLICY
Analyse the wording
Identify the insuring clause, definitions, notification terms, retroactive provisions, exclusions, limits and endorsements relevant to the insurer's position.
02 / CHRONOLOGY
Reconstruct the insurance history
Map the professional work, emergence of the problem, notifications, renewals, insurer changes and eventual claim.
03 / INSURER
Test the coverage argument
Compare the insurer's reasoning with the policy wording, contemporaneous evidence and the actual allegations made against the professional.
04 / STRATEGY
Prepare the next stage
Structure the matter for insurer correspondence, negotiation, specialist legal advice or litigation support where the coverage dispute cannot be resolved.
Common Questions
Professional indemnity insurance disputes
What does claims-made professional indemnity insurance mean?
Broadly, claims-made cover looks to the policy in force when a claim is first made or, depending on the wording, when a qualifying circumstance is notified. The exact operation depends upon the individual policy.
Does it matter that the alleged negligence happened years ago?
It can matter, but it does not necessarily identify the responding policy. The current or relevant historical policy, retroactive provisions, notification history and previous circumstances may all need to be considered.
What is a notification of circumstances?
Many PI policies permit or require notification when facts or circumstances arise which meet the policy's stated threshold for potentially giving rise to a future claim. The precise wording and notification requirements should be checked.
Is telling the insurer at renewal enough?
Not necessarily. Information supplied during renewal and formal notification under the policy are not automatically the same thing. The particular policy requirements and communications should be examined.
What does a reservation of rights mean?
It generally means the insurer is preserving one or more coverage arguments while the claim is investigated or handled. It does not necessarily amount to a final refusal of indemnity. The particular reservation should be analysed carefully.
Can an insurer defend the negligence claim but still dispute cover?
Potentially, depending on the wording and circumstances. The professional should understand whether indemnity has actually been confirmed, what rights are reserved and who is addressing the separate coverage issue.
What is aggregation?
Aggregation concerns whether multiple claims or losses are treated together for insurance purposes. Its effect can be important for policy limits and excesses and depends heavily on the wording and facts.
What happens if the PI insurer refuses indemnity?
The refusal should be tested against the policy wording, chronology, notification history and factual basis relied upon. A refusal by the insurer is its coverage position; it does not by itself establish that the policy properly excludes the claim.
Important information
Professional indemnity policies vary significantly between professions, insurers and policy years. Regulatory or professional-body minimum wording may also apply to some insureds.
References on this page to claims-made cover, notification, retroactive dates, aggregation, exclusions, defence costs and other policy features are general. The individual policy and insurance history must be examined.
Insurance Dispute Service provides claims analysis, insurance dispute support, case preparation and litigation support. The appropriate professional and regulatory structure depends on the work required.
Public Access enables suitably registered barristers to accept direct instructions. Conduct of litigation is a separate reserved legal activity and appropriate authorisation is required where that work is undertaken on a client's behalf.
This page provides general information and is not legal advice. No particular outcome is guaranteed. Policy notification deadlines, limitation periods and procedural deadlines should be checked for the individual matter.
PI Insurer Questioning Cover?
Do not treat the insurer's coverage position as the final word.
If your professional indemnity insurer has reserved its rights, questioned notification or indicated that it may refuse indemnity, we can examine the policy, insurance chronology and underlying professional claim together.