Professional Liabilities Back to Basics in Challenging Times

The third of these illustrations helps to show that if some form of perceived defect has been made known to the professional and the realistic possibility of a design allegation cannot be ruled out then generally the two tests will be satisfied, triggering the policy obligation to notify insurers. Professionals therefore have to be prepared to engage in a degree of speculation against themselves, simply as part of taking a step back and being objective for the purposes of the first test. They are not, however, required to enter the realms of fantasy and dream up far fetched possibilities since clearly that would no longer qualify as an objective view. in some criticism of the design is sufficient to satisfy the objective test. Objectively, the fact that the rooms are overheating can be attributable only to three possible causes or a combination of them (design/specification, quality of installation/product or user error). Absent compelling evidence to the contrary, there is a realistic risk that the investigation might produce at least some criticism of the design and a future demand for compensation. Separately, the fact that the designer has been made aware of those investigations is sufficient to satisfy the subjective test. Spurious Allegations A Claim is notifiable even if it is time barred, completely misconceived on its facts or defendable for any other reason – all that is important is that some assertion has been made. On the relatively rare occasions where Claims have not been notified when they should have been, the reason usually given is that the professional didn’t think it was necessary to notify Claims which he never thought would be pursued. Unfortunately this still technically amounts to a breach of policy conditions.

Claims Within the Excess Similarly the definition of Claim makes no mention of the policy excess and therefore all Claims are notifiable regardless of their value, but subject in practice to a de minimis principle.

Potential Consequences of a Failure to Notify The professional’s notification obligations are drafted into the policy wording as conditions within the ordinary meaning of the term – they are conditions which must be discharged in order to trigger the insurer’s obligation to provide indemnity. The problem is that the condition can only be discharged within the policy period and there is no opportunity to rectify any