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Notifying a claim or circumstance under your policy does not mean you are automatically covered, it is therefore very important that you understand the process insurers will follow once a claim or circumstance is notified to assist you in maximising the benefits under your policy.

If an insurer is notified of a circumstance that may give rise to a claim but no formal claim has been made the insurer will most likely note their records and defer investigation of the matter until (and if) a claim eventuates. However this will depend upon the significance of the matter.

If a significant circumstance is notified or a formal claim has been made then the insurer will usually first investigate whether you are entitled to indemnity under the policy, such investigations are normally undertaken by a solicitor on the insurer’s behalf. A solicitor’s initial brief is usually twofold where they are asked to investigate the matter to determine whether you are entitled to indemnity under the policy whilst at the same time conduct defence of the matter.

Investigation of your entitlement to indemnity will involve analysing the policy wording to determine whether the current matter:

i) Satisfies the insuring clause.

ii) Is subject to any of the policy exclusions or endorsements that include, restrict or exclude cover for such matters.

Perhaps the most common ground for insurers refusing indemnity is due to “known circumstances” whereby an insurer relies upon an industry standard policy exclusion to deny a claim on the basis that the insured was aware of the claim or circumstance prior to the policy inception.

It is also important to note the solicitor in the above circumstances is normally acting on behalf of the insurer, not you, therefore in some instances it may be prudent for you to obtain your own independent legal advice.

Discuss any circumstances with your broker as soon as you become aware of them and seek their advice.



Specialist Insurance Brokers