Professional Indemnity Insurance
What are the consequences of becoming a Successor Practice?
The term ‘Successor Practice’ was coined to determine which insurer covers claims against firms following merger or takeover. However, firms can unwittingly fall into the definition, leading to significant liability for claims of the ‘prior practice’, or even worse, the catastrophic failure of the firm, having been unable to obtain insurance on renewal.
The term is defined in the SRA Glossary but there’s leeway in how it is applied.
Coverage Investigations
Upon notification of a circumstance or claim, professional indemnity insurers will consider the extent to which they are obliged to provide the firm and individual insureds with cover.
The principal ground upon which cover may be excluded is for dishonesty. If suspected, your insurer will commence a coverage investigation. They are likely to, and should, instruct a separate firm to handle the coverage investigation, as distinct from the firm acting for you on the notified claim.