The purpose of this practice note is to provide guidance to the profession on the ‘double trigger’ notification of claims rules for the 2013/2014 indemnity period. This information is intended as general guidance and does not constitute a definitive statement of law.

Solicitors’ professional indemnity insurance is on a ‘claims made and notified’ basis. This means that, in accordance with the minimum terms and conditions, insurers must indemnify the firm against civil liability incurred by the firm arising from any provision of legal services provided that:

• A claim in respect of such civil liability is first made against the firm during the coverage period and notified to the insurer during the coverage period, or within three working days immediately following the end of the coverage period, or
• A claim in respect of such civil liability is first made during or after the coverage period, and arises from circumstances first notified to the insurer during the cover period or within three working days immediately following the end of the coverage period, provided that the firm was aware of the circumstances during the coverage period.

Coverage period

The ‘coverage period’ for a firm is the period for which the insurance (or Assigned Risks Pool coverage as the case may be) held by the firm affords cover.

Claims

The requirement for a claim to be both made against the firm and notified to the insurer during the same coverage period is referred to as the ‘double trigger’, in that both requirements must be met for the claim to be covered under the policy.

For example, if a claim is made against a firm in one coverage period but the firm fails to notify its insurer of this claim until the next coverage period, the claim will not be covered under the insurance policy for either coverage period. The firm will be without cover for that claim.

Circumstances

With regard to circumstances that may give rise to a claim, the firm must notify the insurer of any such circumstances arising in the coverage period in which the firm first becomes aware of those circumstances. The insurer will then be required to cover a claim arising out of those circumstances in the future. For example, if the firm becomes aware of circumstances that may give rise to a claim in one coverage period, it must notify its insurer of those circumstances in the same coverage period. If those circumstances give rise to a claim in future, that claim will be covered by the firm’s insurer for the coverage period in which the circumstances were notified.

Should the firm fail to notify the insurer in the coverage period in which it first becomes aware of circumstances that could give rise to a claim, the insurer is not required to cover any future claim arising out of those circumstances. For example, if the firm becomes aware of circumstances that may give rise to a claim in one coverage period, but fails to notify their insurer of the circumstance during the that coverage period, a claim arising from those circumstances will not be covered by the insurer for that coverage period, or any insurer for a future coverage period. The firm will be without cover for that claim.

Continuous cover exception

There is an exception to the double trigger rule where the double trigger (the requirement to notify the claim or circumstance in the same coverage period in which it was made) does not apply if the firm maintains continuous cover with that insurer without interruption over two or more consecutive coverage periods; that is, the firm has maintained insurance between the relevant coverage periods with the same insurer. This exception was introduced in the 2013 amending regulations and applies to claims and circumstances arising after 1 December 2013.

The self-insured excess for a claim where the continuous cover exception applies shall be the higher of the applicable self-insured excesses between the two coverage periods, and the limit of liability shall be the lower of the two coverage periods.

Notice period

The minimum terms and conditions contain a provision that allows firms to report claims or circumstances, which they are aware of during the coverage period, to their insurer within three working days immediately following the end of the coverage period. A firm availing of this provision will be required to provide evidence to its insurer that the claim was notified to the firm, or that the firm was aware of the circumstances, prior to the end of the coverage period.

Notification of claims and circumstances before the renewal

Firms should notify their insurers immediately when they become aware of a claim or circumstance during the coverage period. Firms should ensure that all claims and circumstances that have arisen during the 2013/2014 indemnity period (1 December 2013 to 30 November 2014) are notified to their insurer on or before 30 November 2014. Failure to notify your insurer of claims or circumstances within the same coverage period as the claim or circumstance arises will result in the failure of coverage by your insurer for that claim, thereby leaving your firm uninsured for that claim.