Claims

The definition of ‘claim’ in the policy wording is a "Written or oral monetary demands received by the Insured or written or oral allegations of breach in the rendering of Insured Services by the Insured and resulting from a single error, omissions, or negligent act regardless of the number of claimants, insureds, or suits".

It is essential that you advise your broker or the insurer directly immediately of any claims. By not advising of such events immediately, you prejudice the insurers ability to defend you, and as a result also put your ability to claim under your policy at risk.

Q. I just completed a project and my client is very unhappy and I think they may sue me…what should I do?
A. Notify your servicing broker immediately. Even if the client has not formally advised you that they will be seeking compensatory damages, Sovereign General needs to be made aware of the possibility of a claim so that they may prepare to properly investigate the allegation and defend you if necessary.

One very important term of your coverage to be aware of is the insurers "Notice of Claim" requirement. Failure to report the claim, or potential for one, prejudices the insurers ability to investigate and defend you. Accordingly, claims not reported immediately can be declined under this condition. It is very important that you do not try to settle disputes privately without notifying Sovereign. Although many people may view private settlement as the "consumer friendly" approach, clients need to be aware that by choosing this avenue, that any future ability to collect under the policy has been compromised (i.e. if you try to pay the client out privately and they are demanding on more, you cannot go back to your policy for reimbursement of monies paid or for new demands made by the client).

A second very important thing to remember is to not admit liability. To do so would, again, prejudice Sovereign’s ability to investigate and defend you against allegations. By admitting liability, you could forfeit your right to claim under this policy.

Key Point: Because your policy today responds to claims completed in the past, you will want to ensure you don’t reduce coverage after completing a project where the owner has asked you for a higher limit. If a claim is presented after you reduce coverage, only the reduced amount will be available to cover your loss.