Home > Resources > Design Pro > Newsletters & Publications > Promark > Pro Points - 6/20/11 > Pre-Claims Assistance

Pre-Claims Assistance

Pre-Claims Assistance - Free for Everyone?

Many of our design professional clients are concerned about the effect a claim will have on their insurance program. They ask if it will adversely affect the cost of their insurance, or whether it will jaundice the relationship with the insurance company. There is a widespread belief that, like their auto insurance, the minute a claim is submitted the insurance company will increase the rate, or threaten to cancel the policy. Actually, most reputable professional liability insurance companies encourage early notification of claim situations, or pre-claim issues.

 
A “claim” must be reported, otherwise coverage could be impaired. Pre-claim reports (everything else) are initiated voluntarily. Doing so can trigger valuable policy benefits.
 
 
Pre-Claim Assistance
 
How to effectively manage potential claims
Effective claim management for construction claims starts with early claim notification. When a client notifies the insurance provider of a claim or potential claim early in the process, the likelihood of the claim being effectively resolved is significantly increased. Experience shows that early claim or pre-claim notification results in a positive outcome. The claim generally is resolved in less time, with reduced aggravation and fewer dollars. The insurance provider also benefits because early notification and quick resolution can mean decreased expenses and better settlements.
 
Situations that benefit from a pre-claim assistance program
Insurers, recognizing the benefits of early notification of a potential claim, offer pre-claim assistance programs for design professionals to help them manage claims more effectively. The benefits of the program are not only in terms of time and money. By offering this program, insurers are reinforcing their commitment to a long-term relationship with design professional policyholders. Design professionals can encounter a number of situations in their day-to-day activities. Following are just a few of the instances when pre-claim assistance program can help:
 
• Death or injury on the job site
• Death or injury on a completed project
• Cost overrun claim by a contractor against the owner
• Claim for extras by a contractor against the owner
• Excessive number of change orders or requests for clarification on a project
• Claim for changed site conditions by the contractor
• Design, specification or code errors or omissions by the contractor
• Unauthorized change to the design documents
• Termination of the insured, its sub-consultant, the contractor or subcontractor
• Failure or collapse in a building component or system
• Request for the insured's deposition as a non-party witness
• Request or subpoena for the insured's records
• Owner's refusal to pay the insured's outstanding fees
• Contractor’s refusal to pay its subcontractors
• Owner asking insured to execute an unfair contract
• Dispute between the contractor and its subcontractors, including refusal to pay
• Investigation of the project by a government authority
 
The pre-claim assistance process
 
As part of the pre-claim assistance process, company claim representatives will work with you to gather and assess the facts
in an attempt to manage the investigation and disposition of the claim. Assessment activities include attempts to:
• Identify the wrongful act(s) that may be the basis for a claim being made against you.
• Identify the nature of any possible injury or damages that may result if a claim is made.
• Identify how and when you first became aware of the pre-claim situation.
As part of the process, we also help manage the legal counsel and experts. This includes:
• Retaining an attorney on your behalf and paying for legal expenses while attempting to mitigate the situation.
• Retaining an expert on your behalf and paying for the related consulting expenses while investigating the facts of the case. Under the terms of your policy, attorney and expert expenses do not apply to your deductible or policy limit. Another advantage of the pre-claim notification, investigation and assessment process is that, once you have reported the situation to your insurance company, policy coverage is positioned to respond to any subsequent claim that might arise from the pre-claim situation. When confronted with a pre-claim situation, prudent design professionals know the benefits of early pre-claim notification. If you encounter a potential claim, remember to take advantage of pre-claim assistance program.
 
Not all Insurance companies offer a pre-claim feature to the professional liability policy. Some companies offer more restrictive versions than others. Some do not have formal pre-claim provisions in the policy at all. We review all policies closely to determine if contains a meaningful and effective form of pre-claim assistance.