For many business owners, receiving notification that a claim is being made against you or your business is completely unchartered territory.
The first question that will most likely come to mind is ‘what do I do now?’
The good news is that as unsettling as receiving that nasty letter is, you are not the first person this has happened to and there is a process to follow to place yourself in the best possible position to handle the matter correctly – and avoid any liability.
Below we will discuss the way in which you should handle a notification should you receive one.
1. Do not admit liability
This may seem like common sense but you would be surprised at the number of people who respond directly to the party making a claim against them to discuss the matter.
In doing so, you may be doing more damage than good by inadvertently admitting liability.
The key here is to not discuss the potential claim with anyone or admit liability in any way.
2. Contact your broker
Before discussing the matter with anyone, we recommend the first step you take is to contact your broker to notify them of the correspondence as soon as you receive it.
It is important that you notify your broker of any potential claims as soon as you are aware of them as this may lead to the nullification of your cover should the claim materialise at a later date, particularly under a Claims Made policy.
Your broker will then assess your case to determine if there is a claim present or if there is scope for a claim to arise in the future.
From there, your broker will provide you with advice as to how to best handle the situation and what actions you are required to take.
In conjunction with your broker, it is important to analyse what lead to the incident/situation that has resulted in the claim or potential future claim.
This may involve sitting down and outlining the important facts surrounding the incident.
Did an actual incident occur and how did it occur? Is there a possibility that an incident could occur in the future?
Was this a result of internal systems and processes or external influences?
These types of questions are important to consider to prevent the same incident from occurring again and eliminating any potential insurance exposures for your business.
This will also assist your insurance broker in grasping a full understanding of the situation in order to best assist you.
4. Damage control
Through investigating how the incident came about or how it may lead to a potential claim in the future, you can then start to implement measures to contain the situation and ensure it does not occur again – or occur at all.
Again, your broker can provide some advice around how to best manage the situation while the claim is being assessed.
Depending on the nature of your specific situation, there are a number of ways in which your case could result.
If you are found to be liable for any incident that may have occurred, your insurance broker will work with you to process your claim and obtain the best possible result under your policy.
If it is determined that there is potential for a claim to arise in the future, your broker will guide you through the necessary paperwork that is required to be completed to confirm you have notified your insurer of that potential claim.
6. Potential consequences
A commonly asked question after receiving a notification is ‘will this impact me at renewal?’
The answer to this will depend on the frequency, severity and nature of the notification or notifications against you. It will also depend on what Risk Management you have in place to prevent future instances of a similar nature. Each notification has different circumstances so it’s not possible to say categorically what the impact on renewal will be.
We can only say that the potential cost of NOT notifying claims is far worse than any increases at renewal.
The central message from this article is to always contact your insurance broker immediately upon receiving any form notification of a potential claim – and don’t panic.
This is not uncommon in business and the best plan of attack is to contact your insurance broker who will provide you with the best course of action to assist you in protecting your business.
Would you like further information regarding notification? Contact us.