Businesses notifying potential negligence claims to their insurers may anticipate that the same events could lead to other claims or costs. A solicitor faced with a claim for negligence notified his insurer. Later the Solicitor’s Regulation Authority (SRA) took action against him for similar negligence in relation to five other clients. He tried to argue that the original notification should be sufficient to cover the subsequent Solicitor’s Regulation Authority proceedings in the matter of Lemma Europe Insurance Company (2014).
On this occasion the argument failed. The court considered the notifications given against the terms of the policy and identified clear wording dealing with notification of, on the one hand, claims and, on the other, circumstances which in this policy were defined as being 'any incident that might give rise to a civil liability claim'. There was no indication that a notification of one claim should be considered to relate to all further claims. In any event, the court was apparently not satisfied that the original notification satisfied the 'circumstances' trigger.
The outcome of this case depended on the specific policy wording. However, we still see many instances where businesses are losing valuable insurance protection for claims by failing to notify circumstances that may give rise to claims or claims themselves in accordance with their policy requirements. The fundamental advice remains to be familiar with the terms of your policies and to make notifications accordingly. If facts change (particularly if other claimants or potential claims emerge) revisit the notifications given and keep the insurer/ broker informed.
Matthew Walker leads Burges Salmon’s Insurance group.