This article is part of the 50 Police Surgery series Professional Indemnity Insurance (PI) that analyzes the policy contents in detail so you fully understand the protection benefits it offers. In this article, we’ll discuss the Claim Settlement Clause, which governs how claims are settled between the insured and the insurance company.
This article was written by Mhd. Taufik Arifin ANZIIF (snr.assoc) CIIB, an insurance broker with over 40 years of experience. With the support of L&G Insurance Broker, you will understand how PI claims are processed, your rights, and the broker’s role in ensuring fair and transparent claims processing.
Claim Procedure in General Insurance Policy
In general insurance, the claims procedure is the steps the insured must take to obtain compensation from the insurance company after a loss occurs. This process is usually clearly outlined in the policy and is binding.
In general, the procedure includes:
- Loss Notification
The insured is required to immediately notify the insurance company or broker of any loss or incident that could potentially give rise to a claim. The sooner the report is submitted, the lower the risk of denial.
- Completing the Claim Form
The insured fills out the official claim form provided by the insurer, accompanied by supporting documents such as a police report, photos of the damage, invoices, or proof of transaction.
- Survey and Investigation
The insurance company can appoint a surveyor or loss adjuster to assess the damage and determine the cause, whether it is in accordance with the risks covered by the policy.
- Evaluation and Negotiation
The insurer evaluates the claim based on the results of the investigation. If there are differences of opinion, negotiations can take place, particularly regarding the amount of losses recognized.
- Claim Payment
Once approved, the insurance company will pay compensation according to the policy terms, limit of liability, and deductible provisions.
A clear claims procedure is crucial to provide certainty for the insured. However, many claims fail not because the risk was not covered, but because of procedural errors. Therefore, using the services of an experienced insurance broker like L&G Insurance Broker will ensure that claims are processed smoothly and your interests are well protected.
Claim Settlement Clause in PI Insurance
In a Professional Indemnity (PI) policy, one of the clauses that determines the certainty of coverage is the Claim Settlement Clause. This clause governs how claims will be handled, from verification and investigation to payment by the insurance company. For professionals, understanding this clause is crucial because it concerns your right to fair and timely compensation.
In general, the Claim Settlement Clause covers several aspects:
- Claims handling procedures – how claims are submitted, what documents must be attached, and applicable time limits.
- Insurer’s authority – the insurance company’s right to investigate, appoint a loss adjuster, or even negotiate with the claimant.
- Insured rights – assurance that valid claims will be paid according to the limit of liability stated in the policy.
- Legal costs & settlement – rules regarding who bears legal, mediation or arbitration costs.
Problems often arise when the insured doesn’t understand the details of this clause, resulting in delayed or even rejected claims. For example, additional document requirements that weren’t previously explained, or differing interpretations of who has the authority to appoint a lawyer.
This is where the role of an experienced insurance broker like L&G Insurance Broker becomes crucial. Brokers ensure clear clause wording, avoid ambiguity, and assist clients throughout the claims process. With over 40 years of experience, L&G has proven its ability to pressure insurers to settle claims fairly, quickly, and transparently.
By understanding the Claim Settlement Clause and being accompanied by L&G, you are not only protected on paper, but also in real practice when the risk actually comes.
Why is the Claim Settlement Clause Important?
In a Professional Indemnity (PI) policy, one of the most vital clauses is the Claim Settlement Clause. This clause details how claims will be handled, from the reporting stage to final settlement. Without a clear clause, the insured could face serious problems when a claim is filed, such as late payment, unjustified denials, or unrecognized legal costs.
General Contents of the Claim Settlement Clause
- Claim Process – explains the steps the insured must take, from notification, document submission, to official correspondence.
- Insurer Rights – the insurance company has the right to conduct an investigation, appoint a loss adjuster, or negotiate directly with the plaintiff.
- Insured Rights – the insured has the right to receive valid claim payments according to the limits of liability and policy conditions.
- Additional Costs – including legal fees, mediation, arbitration or amicable settlement, which are usually covered by insurance if the clause is appropriate.
Real Case Study
- Architectural Firm in Jakarta
A Rp 15 billion lawsuit was filed due to a design error. Thanks to a clear claim settlement clause, the insurance company covered the legal costs and paid Rp 10 billion in legitimate claims. The remainder was renegotiated, allowing the firm to remain viable.
- IT consultant in Surabaya.
Facing a data breach claim from a multinational client, the company would have had to cover nearly all legal costs without a broker. However, thanks to the broker’s assistance, the Rp 7 billion claim was successfully processed and covered by the insurer as stipulated in the terms.
- Auditors in Singapore
He was taken to court for allegedly failing to detect fraud. The PI policy, with its strong wording in the Claim Settlement Clause, ensured that all legal and settlement costs, amounting to Rp 20 billion, would be covered by the insurer.
The Role of Brokers Like L&G
Claims are often a source of dispute between clients and insurers. L&G Insurance Broker, with over 40 years of experience, plays a key role in:
- Drafting the policy wording so that claim rights are clear and not open to multiple interpretations.
- Assist clients in preparing documents according to procedures.
- Pressure insurance companies to settle claims quickly and fairly.
- Assisting in settlement negotiations with third parties.
Conclusion
Claim Settlement Clause is one of the most important elements in the policy Professional Indemnity Insurance (PI). This clause not only determines how claims are processed, but also serves as a benchmark for whether the policy actually provides real protection or is merely a formality. Without a proper understanding, many professionals or companies find themselves trapped in lengthy bureaucracy, with claims delayed, or even rejected on procedural grounds.
This is where the role of an experienced insurance broker becomes crucial. L&G Insurance Broker, with over 40 years of experience, fully understands the complexities of claim settlement clauses. L&G not only ensures clear policy wording and benefits clients, but also actively assists throughout the claims process: from document preparation and coordination with loss adjusters to negotiations with insurance companies.
With this kind of support, clients can feel secure knowing that every claim is handled professionally, fairly, and transparently. There’s no longer the worry that their premiums will be wasted if a risk actually occurs.
So, if you are a professional or service-based business owner, make sure your PI policy is equipped with a strong Claim Settlement Clause and is managed by a trusted broker such as L&G Insurance Broker. That way, the protection you have is not just a promise, but a certainty.
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