Frequently asked questions

You are certain to have questions before deciding where to place your Professional Indemnity insurance.

Q: Does a firm need to notify a circumstance?

Yes. Insurance is a contract of ‘utmost good faith’. Firms are obliged to tell us as soon as possible of any circumstances of which they become aware that may give rise to a claim. They should not wait for a claim to materialise. Notifying circumstances and claims promptly is not only a requirement of the policy, it helps us to provide, where  appropriate, early support and assistance through our in-house claims team.

Conversely those firms who fail to notify a circumstance or leave it late should be aware that the policy provides for the insurer to recover its outlay where prejudice has occurred.

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Q: Can a firm choose to pay the claim and not notify you or have any notification cancelled?

A firm can if they wish, pay the claim in full themselves however they are required to notify any claim or circumstance to Zurich Professional & Financial Lines.

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Q: A firm has sacked the partner who gave rise to the claim. Why are they still being penalised for it?

Unfortunately a claim against the firm remains and forms part of the firm's ongoing claims history. Whether the accountant concerned has left or not does not alter the claims record.

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Q: The PMO (Probable Maximum Outlay) on this claim is not in line with what was expected. How is this figure calculated?

The PMO is the worst case scenario for a payment on a claim. It is the probable maximum for a claim assuming an award in the claimant’s favour and all anticipated external costs including claimant and defence costs, and any other fees to anticipated disposal.

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Q: If a claim is settled within excess and no defence costs are incurred, will it affect future premium?

In general no. In the majority of cases a payment out of the excess will not affect the premium. However there may be some incidents where it will be taken into account due to the severity of the claim.

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Q: Will a firm be covered for defence costs and are they part of the limit?

Yes, they will be covered for defence costs. They are not part of the limit of indemnity.

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Q: What does a ‘claims made’ policy mean?

It is a policy that covers claims made during the policy period which have not previously been notified to the insurer and claims arising from circumstances first notified during the policy period.

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Q: A claim has just been made against a firm which arises from a transaction carried out in 2000. Do they notify their previous insurers?

Yes, if the claim arises out of circumstances already notified to them. Otherwise no, their current insurer will deal with the claim.

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