A circumstance is generally an event, allegation or set of facts that could reasonably be expected to give rise to a Professional Indemnity claim.
A formal claim or letter of demand does not necessarily need to have been received.
Examples can include:
- discovering a significant design error
- a client alleging that engineering advice was incorrect
- serious defects being identified on a project
- another consultant or contractor blaming the engineer for a loss
- notification of substantial rectification costs
- a dispute where the engineer may later be joined
Professional Indemnity policies commonly operate on a claims-made-and-notified basis, although the exact wording varies between policies.
Under section 40(3) of the Insurance Contracts Act 1984, written notice to the insurer of facts that might give rise to a claim, given as soon as reasonably practicable after becoming aware of those facts and before the policy expires, can be important if a later claim is made.
Engineers should avoid deciding for themselves that a matter is too minor to raise where there is a realistic prospect of a claim. If there is uncertainty, contact the broker promptly so the matter can be considered and, where appropriate, notified to the insurer in accordance with the policy.
See the Insurance Contracts Act 1984 for the current wording of section 40.
