Steering clear of trouble – how to avoid a claim
Know your client's business and your own competence.
Do not fill in proposal forms for clients. Emphasise that all material facts must be disclosed and explain the declaration on the proposal form.
If you become aware of facts that the insurer might consider to be material, inform the insurer and, at the same time, advise the client of your intentions. If your client does not agree to the disclosure, withdraw from acting as his or her intermediary.
Confirm instructions to your client and insurer and put your recommendations in writing.
Do not delay in placing. Phone or fax your instructions and follow up with a hard copy. If there is a delay, contact your client.
Keep full attendance notes of all meetings.
Keep file notes of phone conversations, with dates and times and the name of the person to whom you spoke.
Keep copies of the proposal form, other placing information and the policy. Do not keep the clients' copies for them. Make sure the client is told to read
the policy carefully and send specimen wording if there is a delay in issuing
the policy.
Do not make the clients' decisions for them.
Explain all warranties, special conditions, exceptions and the like and confirm all discussions in writing. Make certain the client can comply with them.
Do not organise sprinkler or alarm quotes. Let the client do this.
Make sure your staff know the General Insurance Standards Council's code of conduct.
Make sure your own personal indemnity policy is OK and that it covers the exposure to your largest client.
Identify to your client any possible disputes with insurers and do everything to protect them from litigation.
Do not rely on warnings in summary of insurances without full discussion.
At renewal, follow the checklist and remind your client of their duty of disclosure.
Select only responsible insurers that are authorised to write business in the UK. If only non-admitted insurers have to be used, explain to your clients the problems likely to arise over claims.
Recommend professional valuations on buildings and plant where appropriate.
Consult with your clients' auditors when arranging business interruption insurance.If worst, comes to worst – what to do when faced with a possible professional indemnity claim:
Beware of an enquiring letter from your client or their solicitors after an unpaid claim. Take advice on your reply.
If you do have a claim made against you, recognise your errors and be prepared to pay a reasonable sum if you are wrong. It may be cheaper in the long term.Derrick Cole is the vice-president of the British Law Association and has acted as an expert witness in more than 200 legal cases, mostly involving non-disclosure and broker negligence. He is also an associate of Insurance Solutions.
