Professional indemnity claims:
what to do the day a claim looms.

Professional indemnity insurance is written on a claims-made basis. That single phrase explains why this class of cover feels different from every other. The policy that responds is the one in force when the claim is first made against the professional during the policy period — not the one that was running when the negligent advice was given. It also explains the whole discipline of the first week: notification to the insurer, preservation of the file, and an immediate, documented response. This article sets out, step by step, what a professional — engineer, surveyor, accountant, lawyer, doctor or architect — should do from the moment a complaint or demand first appears.

The claims-made principle decides everything

Under a claims-made policy, cover is triggered by a claim being made against the insured during the period of insurance. The consequence is that when a professional learns of a potential claim matters as much as the claim itself. Notify and secure cover under the current policy, and the claim is handled. Sit on a demand letter or a client's written threat, and the professional risks facing it under a later policy year — or as an uninsured liability, where the policy contains an extended reporting period that has to be exercised before it lapses.

In Uganda, the disputes arising around professional indemnity cover have already reached the courts in instructive ways. In Sanlam General Insurance v Finance Trust Bank, a bank sought to recover directly from the professional indemnity insurer of a firm of surveyors whose valuation reports had been relied on in lending decisions. The Insurance Appeals Tribunal ordered the insurer to pay the bank, but the High Court — in a judgment under appeal — set that aside on the principle of privity of contract: the bank was not a party to the surveyors' policy and could not enforce it. The claim to indemnity, the court held, belongs to the insured professional. The case is a reminder that a professional indemnity policy is the professional's own protection — and that preserving it, through proper notification and conduct, is a matter of personal discipline, not a courtesy to the client.

Step one: notify the insurer immediately

Most policies require notification of any claim made against the insured, and of any circumstances that could give rise to a claim, as soon as practicable within the policy period. Claims-made cover is usually written so that early notification of circumstances — an angry client letter, a rejected valuation, a complaint to a professional body that has not yet ripened into litigation — brings later claims under the current policy. This is the policy's protective mechanism, and it only works if used.

Notification should be in writing and should include, at minimum: the identity of the claimant, the nature of the services alleged to have been negligently performed, the dates of the work, and any demands made. The insurer should be given everything the professional knows at that point — a notification that discloses too little carries its own risks, since the courts and arbitrators treat incomplete disclosure on notification as a failure of the condition precedent that cover depends upon.

Step two: preserve the file

Professional negligence is established by four elements, and every one of them is proved from documents. The professional must be able to show that a duty of care was owed; that it was breached — that the professional failed to act with the care, skill and judgement reasonably expected of peers in the same profession and circumstances; that the breach caused the client's loss; and that the loss itself is quantified. Each element rests on the working file: instructions, correspondence, calculations, drawings, reports, certificates, valuations, emails and contemporaneous notes.

The moment a claim looms, the instinct to tidy the records must be resisted. The file should be kept complete and unaltered. Nothing should be amended, back-dated or destroyed — adverse forensic steps of that kind are what an assessor or the insured's own lawyer will have to explain in the one conversation nobody wants. The profession itself treats the standard of care rigorously. The Engineers Registration Board of Uganda, in its guidance on professional negligence, notes that the relevant standard is what a reasonable engineer with the same skills would have done in the same circumstances, and connects that standard to professional codes of ethics — obligations that sit on the engineer's files before any dispute begins.

Step three: make no admissions, say nothing in writing off the record

The instinct of a conscientious professional on receiving a complaint is to reassure and apologise. Under a professional indemnity policy, that instinct must be tempered: the policy typically provides that the insured must not admit liability or settle a claim without the insurer's prior consent, and that cooperation includes referral of demands. An unvetted apology or an admission of negligence made before the insurer has been brought in can be taken as a waiver of defences later. In the Finance Trust case, the surveying firm's admission of professional negligence in a letter dated 4 October 2023 became a contested point on which the insurer built its refusal — a demonstration that even a well-meaning admission can hand the insurer a coverage argument. The professional's response to a claimant should therefore be courteous but brief: an acknowledgment of receipt, a statement that the matter will be investigated, and no comment on liability.

Step four: understand what the policy actually pays for

Professional indemnity policies indemnify the insured for damages awarded plus the costs of defending the claim, but defence costs are typically included within the insured's limit of indemnity. A policy of UGX 500 million is therefore not a fund of UGX 500 million for settlement — legal costs eat into it from the first letter. This is why early, decisive investigation matters and why the insurer's appointed lawyers and loss assessors look for the earliest sensible point to control the claim's costs. Prolonged litigation on a weak position consumes the very fund meant to settle it.

Assessors and the insurer's team also scrutinise the exclusions and conditions common on Ugandan market forms: dishonesty, claims arising from known circumstances existing at inception, breach of professional body rules, and failure to maintain the professional's registration or licence. Occupation conditions and adequacy-of-limits conditions matter too — a surveyor or architect whose policy does not reflect the scale of projects undertaken may find the policy responding only partially to a large claim.

Step five: keep the professional bodies informed

For engineers in Uganda, the Engineers Registration Board expects notifiable incidents to follow the regulated route: the Disciplinary Committee handles complaints, currently dominated in recent annual reporting by collapsed-building cases of negligence, and the Board's code of conduct and ethics holds practitioners to duties of care beyond the strict letter of their contracts. The Engineering Professionals Bill, 2024, tabled before Parliament, proposes to extend registration and annual licensing to engineers, technologists and technicians, and to introduce a statutory professional code of ethics and a disciplinary mechanism. The regime under which negligence is measured is becoming more formal, not less. A professional facing a complaint should inform both their insurer and, where required, their professional body — the two audiences respond differently to the same conduct.