Insurance is a safety net that offers financial protection and peace of mind in the face of unexpected events. But to ensure that the safety net isn’t full of holes, it needs to be used correctly.

Whether it’s Professional Indemnity, Property, Cyber & Data, or any other type of insurance, one crucial aspect often overlooked is the need to promptly advise your insurer of any potential claim. In this blog, we’ll explore the reasons why timely notification is essential when it comes to insurance claims in the UK.

(1) Compliance with policy terms and conditions

Firstly, every insurance policy comes with specific terms and conditions that you, as the policyholder, are expected to follow. One of the most common conditions is the requirement to notify your insurer promptly in the event of an incident or potential claim. Failing to do so may result in the insurer rejecting your claim, leaving you without the protection you paid for.

How promptly you should notify a potential claim varies from insurer to insurer, and from policy to policy. The terms and conditions are also often loosely worded and subjective, perhaps requiring claims to be notified ‘as soon as possible’ and rarely stating exactly what constitutes a claim. This can lead to disputes with insurers as to whether a claim was notified early enough.

Claims notifications really are a minefield, causing you to question:

• What is an ‘incident’?
• What is a ‘potential circumstance’?
• Do you need to wait for a solicitor’s letter threatening legal action, or should you notify insurers earlier – such as when an accident has occurred on the premises?
• What if your business is a venue that experiences several injuries a week – how do you know which ones should be notified straight away?

Unfortunately, despite the insurance industry having been around for centuries, there remains no actual definitive answer to these questions. It continues to be one of the consistently vague areas that can trip up a claimant. It’s not fair, but it’s not going to change any time soon – so it pays to be as prompt with a notification as possible.

(2) Faster claims processing

Prompt notification allows the insurance company to start your claims process quickly. This is particularly important when many insurers are struggling to provide an efficient claims service.

Advising early means claims should be resolved faster, which is crucial in situations where immediate financial assistance or repairs are required – such as after an accident or property damage. Early intervention from an insurer also allows them to take full control more swiftly, taking the stress off you. It will often usually reduce the claim amount significantly too, which benefits everyone.

(3) Preventing further damage

In many insurance cases, especially those involving property, prompt notification can help prevent further damage or losses. For example, alerting your insurers to a burst pipe in your tenanted property can lead to timely repairs, potentially preventing more extensive water damage and higher repair costs. This will also help rescue the total amount of the claim.

For some types of insurance, such as Professional Indemnity, insurers encourage the earliest notification of incidents – allowing the policy to be triggered before a claim would traditionally be accepted. This is through what is called ‘mitigation of loss’, and it’s an extension to most decent Professional Indemnity policies. The aim is to allow insurers to step in early so that they can tackle issues before they become litigation, saving everyone (perhaps except the legal profession!) time, money, and hassle.

(4) Access to support and guidance

Insurance isn’t just about the financial payout; it can also provide valuable support and guidance.

For instance, if you have Cyber insurance and you think you have a virus or that someone has hacked your systems, notifying insurers in the first instance not only allows them to take full control nice and early but also offer their help in other ways. They’ll be able to find out the cause of the issue, advise on next steps, get in touch with any affected clients, guide you through notifying the ICO, and assist with the PR aspect of the issue.

(5) Preservation of evidence

In cases involving legal disputes, the preservation of evidence is critical. Timely notification to your insurer allows for the collection and preservation of evidence that may be vital in building your case or defending against a claim. For example, witness statements tend to be more accurate and therefore carry more weight when they’re taken soon after an incident.

This is especially relevant in claims involving Legal Expenses or Liability insurance.

(6) Greater cost-efficiency

Next on our list of reasons why timely notification is essential is that it can lead to cost savings. We’ve already explained how notifying of a leak early means that insurers can quickly arrange for emergency repairs to prevent unnecessary damage and therefore reduce the cost of the claim.

In a different scenario, such as one that would trigger a Professional Indemnity policy, insurers stepping in quickly can reduce the likelihood of expensive court proceedings by negotiating settlements, reducing award amounts and legal fees.

(7) Avoiding legal consequences

And finally, failing to notify your insurer in a timely manner can have legal consequences – especially in cases involving liability or contractual obligations. Courts impose specific timescales for actions to be undertaken, particularly in relation to injury claims. A late notification in this instance can prejudice the position of your insurer.

This might just annoy them and make things a little difficult. However, in reality, it’s also likely to give them a valid reason for rejecting your claim.

Understand your notification requirements with RiskBox

The importance of promptly advising your insurer of any potential claim cannot be overstated. For all the reasons listed here, it ultimately can spell the difference between your claim successfully going through and it being rejected – at great cost to your business’ finances and potentially reputation.

Whatever type of insurance you’re dealing with, timely notification is key to a successful and efficient claims process. Be sure to review your policy documents and understand the specific notification requirements for your coverage. And if you want to ensure your insurance programme works for your particular needs, get in touch with a member of our team.

Photo by Giuseppe Mondì on Unsplash