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Claims made’ policies
When running a talking therapy business, you’ll no doubt be aware of the importance of having professional indemnity (PI) insurance to protect you from risks. But are you aware of the criteria for assessing your claim, should you have to make one?
Unlike liability policies—such as employers and public liability—that pay claims for incidents relating to loss or damage during a typical 12-month period, (the cover term) PI insurance is arranged on a ‘claims made’ basis.
What is a ‘claims made’ policy?
PI policies will issue payment for a claim made during the cover term, regardless of when the incident or alleged incident occurred.
To put this into the context of your business, say a client submits a claim or makes an allegation against you relating to therapeutic services you delivered many years ago. If you have PI in place, depending on your retroactive date*, your claims made policy will cover the historic service to which the claim relates.
Let’s take a look at an example
A client received bereavement counselling five years ago following the loss of her husband. She was satisfied with the results of her sessions at the time. However, two years later, she claims the treatment exacerbated her grief and now suffers from Post Traumatic Stress Disorder. Something she feels is related to the therapy you delivered.
Although the therapy delivered was outside of the current policy period. Because PI is written on a ‘claims made’ basis, the insurer will accept liability. The retroactive date on PI policies arranged by Oxygen is unlimited, covering all previous work and training—valuable reassurance for all our customers.
What does this mean for therapists?
Regardless of policy types, insurance is based on mutual duty and trust between the insurer and the insured. So when arranging PI for your therapy business, your insurer relies on you to provide accurate information. As the insured, you must disclose any information that may influence how your policy is written.
Suppose you become aware of a claim or a situation that may lead to a claim—regardless of your views on liability or the amount involved. In that case, it’s essential to notify your insurer immediately.
Failing to disclose your risks
Under the Insurance Act 2015, there are several grades that insurers respond to someone failing to disclose all risks before arranging the policy. These grades depend on whether it was deliberate and reckless or whether the insurer would have entered into the insurance contract on different terms if full disclosure had been made.
It can be tricky to understand when to notify your insurer of a potential claim. Differentiating between the everyday demands of a challenging client looking for quicker results and a potential compensation claim isn’t always that simple. It may be that under the insurance policy conditions, such a situation should have been notified earlier.
In the case of our example, providing the insurer is satisfied that failure to make earlier disclosure was innocent—in other words, there was no intent to deceive, and no prejudice had accrued to the insurers in the meantime—special policy conditions may state the incident would be covered.
When it comes to the time allowed to notify your insurer, PI policy terms and conditions are strict. An innocent non-disclosure, where you breach a policy condition, puts your insurance protection at risk. This is important to know because by not complying with these rules, you may find yourself uninsured when faced with making a claim.
Understand the terms of your policy
You are responsible for reading your policy’s terms and conditions and ensuring you understand them. Ensuring they’re fully complied with when you submit a claim or when a potential claim arises will avoid issues with policy coverage.
As a general rule, trust your instinct. If you have to ask yourself whether a situation should be reported to your insurer, it probably should be. If in doubt, speak to your broker.
*A retroactive date is the date from which your PI insurance policy has been in place – even if you changed insurance provider during this time – or a date in the past from which you are covered. Your insurance does not cover any claims arising from events before this date.
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