Professional indemnity

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7 tips for dealing with insurance claims

7 tips for dealing with insurance claims

If you’re reading this, you’ve probably either had a bad experience with an insurer or you know someone who has. On a daily basis I receive calls from individuals and businesses who are in a dispute with their insurer about cover extending to a claim or the value of the claim.

There is good news. As an insured, there are things that you can do to give yourself the best shot at your claim being paid, without setting one foot inside a Court room. For most insureds, litigation is expensive and they would be far better off resolving a claim out of Court.

Tip 1: Keep a record of conversations

If you’ve ever called an insurer you will have heard a message which tells you that the call is being recorded for ‘quality and training purposes’.  The record keeping of an insurer (like many organisations) is not foolproof. For this reason, you should keep a record of all calls that you have with the insurer. Keep a record of the date and time of the call, the person you spoke to and the content of the discussion. If something important is discussed, follow up the discussion with an email to the insurer confirming the discussion and the information that they provided.

Don’t record your telephone call using an app on your mobile or a device which is attached to your phone. It is unlawful to record a telephone call with a device physically attached to the telephone and this may include an app on your mobile: Telecommunications (Interception) Act 1979 (Cth). In Queensland, it is lawful for a telephone call to be secretly recorded by an external device (like a dictaphone or an app on a computer) by a person who is a party to the conversation: section 43, Invasion of Privacy Act 1971 (Qld). If you are outside of Queensland, you should check the laws in your State or Territory about recording of conversations.

Tip 2: Get your policy documents

The starting point for any claim is to consider the wording of your insurance policy. In particular, you will need a copy of your schedule of insurance and policy wording (Product Disclosure Statement). You can request these from your insurer or insurance broker.

Most people look no further than their policy wording. You need to read the schedule of insurance with the policy wording. The schedule of insurance talks to the policy wording – it’s like using a key for a map, your schedule of insurance helps you understand how the policy operates for YOU. The policy wording is the same for many insureds but the schedule of insurance explains how you are covered.

Tip 3: Prove your claim and then prove it again (if necessary)

If you make a claim against your insurance – you are required to prove your claim and co-operate with your insurer. This means that you need to provide information to the insurer about the circumstances of the loss and its value. The types of documents and information you should provide vary from claim to claim. Some of the documents you could gather to prove your claim may include: a police report; statements; photographs; invoices; quotes; and, expert reports. Damaged items should not be disposed of if they are relevant to your claim.

Your insurer may appoint a loss adjuster or investigator to consider the value of your claim and whether the loss falls within the cover provided by the policy. Generally speaking, anyone appointed by the insurer to investigate the claim is an agent for the insurer. You should undertake your own investigations with third parties to consider whether the claim has been properly assessed. The cost of doing so may be recoverable against your insurer as ‘claims preparation costs’, however, policies generally require insureds to seek approval from the insurer before incurring these costs.

Once you have gathered as much documentation as possible and you have provided that to your insurer, the insurer may still have concerns. Depending on their response it may be necessary to provide more information or documents in support of your claim.

Tip 4: Request documents

You should request (in writing) copies of all documents that the insurer receives from third parties like reports, quotes, statements, invoices, photographs. You should also request copies of transcripts or audios from conversations with insurers if you think that you have been provided with inconsistent information during the claim process or, when you first placed your cover.

Many insurers subscribe to the 2014 General Insurance Code of Practice. See the full list of insurers subscribed to the Code here. The Code states that insurers will provide copies of reports and other information relevant to a decision to deny cover in certain circumstances. Click here to read a copy of the Code.

Tip 5: Make a complaint

If you are dissatisfied with how your claim is managed or with a decision by your insurer, you can submit a complaint. Your policy will outline the complaints process and should state a telephone number, address and/or email address for this purpose.

I often here from people that they are dissatisfied with the quality of communication from the insurer or the insurer’s agent – e.g. they weren’t provided with adequate information, their calls weren’t returned or they were required to speak to someone new every time they called the insurer. These are legitimate concerns by customers of any organisation and insureds are right to raise them with their insurers. However, it is important to get to the heart of the issue and to identify what is stopping your claim from being accepted or paid. If you cannot work out what the issue is – seek clarification from your insurer and/or advice from your broker, or an independent solicitor.

Once you have submitted your complaint, wait for the complaints resolution period to expire. If it expires and you do not hear from the insurer – follow them up in writing and by telephone. If the complaint does not lead to the claim resolving to your satisfaction, the complaints process should give you more of an idea about the insurer’s concerns.

Tip 6: Seek advice early

I speak to insureds at all stages of their claims. Some people contact me immediately after an event; some contact me years afterwards. Generally speaking, the sooner insureds obtain professional advice from their insurance broker or an independent solicitor, the better.

Tip 7: Request an internal review

An internal review is an opportunity for an insured to ask their insurer to review their decision about a claim and consider the claim again. You may provide the insurer with new information or evidence to consider. Your policy will explain the timeframes within which your insurer is required to make a determination. It is appropriate to seek legal assistance with preparing submissions to the insurer in support of your claim.

Next steps

Once the insurer has internally reviewed its decision, you should seek legal advice about the most appropriate next step in your matter (if you have not already done so). The next appropriate step may be to apply to the Financial Ombudsman’s Service, start proceedings in the Court or apply to the Court for declaratory relief.

Dealing with insurance claims can be particularly stressful and for most insureds it is a foreign experience. It is important to speak to an experienced solicitor or, your insurance broker, at an early stage to ensure that your rights and interests are properly protected.

BOOK A CONSULTATION to discuss an insurance claim by calling 07 3067 3025 or completing the online enquiry form below.

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Kate Denning7 tips for dealing with insurance claims
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Liability arising from progress payment covered by insurance

Liability arising from progress payment covered by insurance

Claim for progress payment – Progress Claim Construction – D&C Construction – D&O Policy – Contract Management

Case note: Chubb Insurance Company of Australia Pty Ltd v Robinson

This was an appeal by Chubb Insurance Company of Australia Pty Ltd (Chubb) to the Full Court of the Federal Court of Australia (Court). The decision of the Court concerned a preliminary issue in the case.

Mr Glenn Robinson who was employed by Reed Constructions Australia Pty Ltd (Contractor) as its Chief Operating Officer (COO) sought cover under the Contractor’s D&O Policy. Mr Robinson sought cover for his role in procuring a progress payment on behalf of the Contractor, under a design and construct contract (D&C Contract).

The Facts

In 2010, the Contractor and 470 St Kilda Road (Principal) entered into a D&C Contract for a construction project known as the ‘Leopold Project’ at 470 St Kilda Road in Melbourne.

The Contractor held a directors and officers liability policy (D&O Policy) with Chubb. Mr Robinson was an Insured under the D&O Policy.

In December 2011, the Principal asked the Contractor to provide a Statutory Declaration signed by Mr Robinson, to support the Contractor’s claim for a progress payment under the D&C Contract. Mr Robinson executed a Statutory Declaration. A progress payment was then made by the Principal to the Contractor.

The Contractor is in liquidation. The Principal commenced proceedings against Mr Robinson in 2012 claiming that:

  1. Mr Robinson did not have a reasonable basis for making the Statutory Declaration submitted in support of the progress payment.
  2. Mr Robinson engaged in conduct that was likely to mislead or deceive and acted negligently.

Mr Robinson sought indemnity under the Contractor’s D&O Policy.

The D&O Policy

Insuring clause

The D&O Policy contained the following insuring clause relating to liability cover for Insureds:

‘Executive Liability Coverage

The Company shall pay, on behalf of each Insured Person, Loss for which the Insured Person is not indemnified by an Organisation on account of any Executive Claim first made during the Policy Period or, if exercised, during the Extended Reporting Period, for a Wrongful Act occurring before or during the Policy Period.’

Exclusion clause

The D&O Policy contained an exclusion clause which read:

‘(A) Exclusions Applicable to All Insurance Clauses 

The Company shall not be liable for Loss in respect of any Claim:

Professional Services  

(v) for any actual or alleged act or omission, including but not limited to any error, misstatement, misleading statement, neglect, or breach of duty committed, attempted or allegedly committed or attempted in the rendering of, or actual or alleged failure to render any professional services to a third party.’

Chubb denied indemnity under the D&O Policy, relying upon this exclusion clause.

The Findings

At first instance, the Federal Court found that the exclusion clause did not operate to allow Chubb to exclude cover under the D&O Policy because:

  1. Mr Robinson’s conduct in signing the Statutory Declaration and procuring payment was ‘project management services’.
  2. Chubb did not establish that project management was a ‘profession’ as at 2010 or 2011. So it was not a ‘professional service’ for the purposes of the exclusion clause.

Chubb appealed the Federal Court’s decision. In the appeal judgment dated 26 February 2016, the Court agreed that project management was not a profession as at 2010 or 2011. However, the Court also found that it did not constitute the rendering of any service by either Mr Robinson or the Contractor. Rather, it was an act done in the course of proper discharge of the Contractor’s contractual obligations to the Principal. The Court was satisfied Mr Robinson’s conduct fell within the insuring clause.

Accordingly, the Court refused the appeal by Chubb because the conduct of Mr Robinson was not a professional service for the purposes of the exclusion clause.

Considerations

The outcome in this case turned on the wording of the D&O Policy, the case pleaded against Mr Robinson and the exclusion relied upon by the insurer.

However, it’s a decision that should be welcomed by insureds and principals. It illustrates the need for parties, insurance brokers and lawyers to identify when an insurance policy might respond to a contractual dispute.

BOOK A FREE CONSULTATION for advice and information about your D&O policy, by calling (07) 3067 3025 or contact us online.

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Kate DenningLiability arising from progress payment covered by insurance
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Professional negligence case against architects succeeds

Case note: Christian Education Ministries – Qld Ltd v Thomson Adsett Pty Ltd [2015] QDC 292

Professional negligence claims against architects – Architects, Engineers & Surveyors – Negligence – Breach of Contract – Professional Negligence – Architect’s Negligence Cases – Architect’s Negligence Examples – Liability Claims Examples

The Design Brief

Thomson Adsett Pty Ltd (Architects) were retained to provide architectural services for the construction of a new multi-purpose assembly hall/sports building (Hall) at the Australian Christian College Moreton at Caboolture (School).

The School claimed that it gave an express instruction to the Architects that the Hall was to have a full-sized basketball court. The dimensions of a full-sized basketball court are a minimum length of 32 metres, a minimum width of 19 metres and a minimum height of 7 metres.

The School claimed that it clarified with the Architects, on several occasions, that the Hall would contain a full-sized basketball court. However, conflicting instructions were given by the School’s principal, Mr Woodward and by the CEO of Christian Education Ministries, Mr Fyfe.

The Architects said that Mr Woodward told them that formal basketball games would not be played in the hall because the School only had 60 students from Prep to Year 12. The Architects said that the design was made to keep the cost of construction controlled for the School.

In an email to the Architects the CEO said the Hall should be, ‘large enough for an indoor volleyball or basketball game’. The drawing that was provided to the School had the words, ‘full-sized basketball court’ on it. However, the brief contained no reference to any affiliations, documents or specific use guidelines such as International Basketball Federation Basketball Rules 2008 Basketball Equipment or Basketball Queensland.

The Architects did not clarify their instructions from the School in writing.

The School used the plans designed by the Architects for the construction of the Hall by a builder. When the Hall was partly constructed, the School discovered that the height of the roof was only 4.4 or 4.2 metres. When the School discovered the problem, it instructed the Architects to redesign the roof, to increase the height to 7 metres, where the basketball court was to be located.

The Issue

The School’s case was that even if conflicting instructions were given to the Architects, the Architects breached their retainer or were negligent for failing to clarify the School’s instructions before making the design. There was no dispute that the Architects accepted that Mr Fyfe had authority to make decisions over the School’s principal, Mr Woodward.

The Expert Evidence

The School called Alan Jordan, Architect, as their expert at trial. Mr Jordan’s evidence was that critical factors are usually confirmed in writing by architects.  Mr Jordan’s evidence was that the Architects’ actions in failing to clarify the instructions from the School in writing, led to the School paying a premium to get what they had initially asked for.

The Architects called Scott Peabody, Architect, as their expert at trial. Mr Peabody’s evidence was that the Architects prepared plans that were consistent with the brief provided by the School. He also noted that there was no reference in the brief to industry specific guidelines concerning the specifications the basketball court should meet.

The Judgment

In a judgment delivered in the District Court on 26 November 2015, the Court found as follows:

  1. The School had given an express instruction to the Architects for the design to include a ‘full-sized basketball court’.
  2. Any comments made on behalf of the School to the effect that it would not play formal basketball games were superseded by the instructions from the CEO of the Christian Education Ministries, Mr Fyfe, that the School required a full-sized basketball court.
  3. The Architects failed to follow the express instructions given by the School.
  4. The Architects were negligent and breached their retainer. The Court awarded damages in favour of the School in the sum of $505,004, including interest of $138,738.04.

Considerations

Here, the School succeeded against the Architects because:

  • findings of fact about the instructions provided were resolved in favour of the School; and
  • the Architects could not effectively defend the case where they failed to clarify conflicting instructions of the School in writing, before making the design.

This case will be of interest to architects, engineers and surveyors, as well as those managing professional indemnity claims against these professionals.

For more information about professional indemnity claims and disputes, see our PROFESSIONAL NEGLIGENCE SERVICES.

BOOK A FREE CONSULTATION for advice and information about your professional negligence problem, by calling (07) 3067 3025 or contact us online.

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Kate DenningProfessional negligence case against architects succeeds
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Insurer not liable for dishonest conduct in deregistered company

Case note: Smart v AAI Ltd; JRK Realty Pty Ltd v AAI Ltd [2015] NSWSC 392

Claim against insurer – Claim against deregistered company – Professional indemnity case

Background

Over the course of five months Mr Nathan Smart and JRK Realty Pty Ltd (the Plaintiffs) transferred $267,000 in a number of transactions to Q1 Financial Services Pty Ltd (Q1).  Q1 was a finance broker.  The Plaintiffs were persuaded to transfer the money by Q1’s general manager, Mr Damian Lynch (Lynch).  Lynch told them that the money would be used to make loans to clients and represented to the Plaintiffs that the loans would return interest at a rate of 3% per month.  However, Lynch misappropriated the funds.

Q1 was wound up and deregistered. Q1 held an insurance policy underwritten by AAI Ltd, formerly known as Vero Insurance Ltd (Vero), at the time of the transactions.  The Plaintiffs brought proceedings directly against Vero under section 601AG of the Corporations Act 2001 (Cth) (the Act).

Issue

The issue for determination was whether, on the facts of the case, Vero was required to meet the Plaintiffs’ claims by operation of section 601AG of the Act.

Findings

Justice Beech-Jones made the following findings in a judgment delivered on 22 May 2015, dismissing the Plaintiffs’ claims:

  1. the Plaintiffs did not make a ‘claim’ against Q1 during the period of insurance and so the insuring clause of the policy was not engaged.
  2. the liability of Q1 was excluded from cover because it arose directly or indirectly from a liability that Q1 assumed ‘outside the normal course of the Professional Services’ as defined in the policy.  In making this finding, the Court accepted the evidence of banker, Mr Dennis Roams for Vero who said, ‘… once Q1 approached Mr Smart and JRK for funds and received funds from Mr Smart and JRK, in my opinion Q1 ceased to be acting as a mortgage broker and/or finance broker. This was not a usual method of disbursing loan funds. In my experience lenders generally provide loan funds directly to borrowers and not to mortgage or finance brokers.’
  3. Q1’s liability was not covered because of an exclusion clause in the policy concerning dishonest and fraudulent acts of the insured. Although, there was a write back to this clause for the dishonest or fraudulent acts of Q1’s employees, it was not engaged because Lynch was an employee of Q1

The Plaintiffs were ordered to pay Vero’s costs.

BOOK A FREE CONSULTATION for advice and information about an insurance matter by calling (07) 3067 3025 or contact us online.

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Kate DenningInsurer not liable for dishonest conduct in deregistered company
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InDefence covers legal and technical issues in a general way. Changes in circumstances or the law may affect the completeness or accuracy of the information published. InDefence is not designed to express opinions on specific cases, to provide legal advice or to establish a relationship of client and lawyer between Denning Insurance Law and the reader, or any third party. No person should act or refrain from acting solely on the basis of this publication. You should seek legal advice particular to your circumstances before taking action on any issue dealt with in this blog.