My company has valid insurance in place, which I reviewed last year. Is that enough to ensure I’m covered in the event of a claim against the company?
Many businesses assume that because they have the relevant insurance in place they will be covered should a claim be made. Unfortunately this may not be the case for a number of reasons that you should bear in mind, both when reviewing your policy and in the event of a claim.
Helen Grimberg, partner in the retail team and joint head of the corporate risks team at Berrymans Lace Mawer LLP, explains: “Firstly, the contract of insurance might not actually cover the type of claim that is likely to be made, as a result of ambiguous wording or exclusions in the small print.” She says that for this reason, businesses should ask their broker to take them through possible claim scenarios and explain whether the insurer would pay out in those circumstances.
The second reason why insurance is often ineffective is because businesses have not complied with the onerous legal requirement to disclose all material risks to their insurer. “It is a common mistake to believe that because the insurer does not ask for information, it does not need to be disclosed,” says Mawer. “You should undertake thorough and regular reviews of the corporate risks that might lead to a claim, involving input from employees across the full spectrum of your business. It is always safer to err on the side of over-disclosure.”
Finally, insurance contracts typically impose a ‘notification period’ requirement, so if a claim is not notified within a set period – it could be under a month – it is not covered. Businesses should ensure that anyone who might receive a claim is fully aware of these.