Having professional indemnity insurance is rather important. So is notifying insurers in time to secure the protection of the policy. And the policy terms may require notification as soon as possible after becoming aware of circumstances reasonably expected to produce a claim (or words to that effect). But what does such a clause actually require?
The Court of Appeal has confirmed the key legal principles applicable, in summary as follows:
- a deeming provision such as this is to be construed and applied with a view to its commercial purpose, to provide an extension of cover for all claims in the future which flow from the notified circumstances;
- a provision which refers to circumstances that "may" give rise to claims sets a deliberately undemanding test; there need only be a possibility of claims in future;
- a notification need not be limited to particular events; the insured may give a "can of worms" or "hornet's nest" notification; i.e. a notification of a problem, the exact scale and consequences of which are not known;
- although the insured had to be aware of circumstances that might reasonably be expected to produce a claim, that did not mean that the insured needed to know or appreciate the cause, or all the causes, of the problems which have arisen, or the consequences, or the details of the consequences, which might flow from them. Such a limitation would seriously reduce the value of claims made insurance;
- if there has been a proper notification of circumstances, any claim arising from those notified circumstances will be considered to have been made within the requisite period of insurance but there must be some causal, as opposed to merely some coincidental, link between the notified circumstances and the later claim;
- when construing a communication to determine whether it is, or its scope as, a notification, one applies conventional principles of interpretation; analysis of a notification clause involves the awareness of a circumstance, a pure matter of fact, and the characterisation of the circumstance as one which may give rise to a claim against the insured.
Euro Pools Plc v Royal & Sun Alliance Insurance Plc  EWCA Civ 808 (13 May 2019)