Mr. Gregory Irgin
RE: PI Insurance
I have 9 years expertise in this area, currently employed as an Associate Partner at FirstCity Partnership, specialising in construction PI insurance.
Your question is subject to how large the quantum (cost)of the claim is, whether you have a history of claims exceeding your self-insured excess and the type of claim itself 9is it a one-off etc).
If we take a common scenario, your insurer has had to settle a claim for you, which is significant in sum but not exceeding your limit of liability. In this instance, the natural inclination of the insurer is to increase your premium, to reflect this loss. Any demonstration by you that such a circumstance is unlikely to happen again will mitigate against a high increase in premium. In addition, a no-claims history of many years will also assist your broker in limiting your premium increase.
What will affect your insurance, as the soft market turns to a hard market, is the overall curve by the market in increasing premiums and other insurers not wishing to take on an unknown risk that has just paid a large claim with another insurer. Therefore you may well feel forced to renew with your current insurer despite the increased premium.
Taking your question to an extreme, a claim that exceeds your present limit of indemnity, will cause a significant increase in premium. The cost of this premium may be the contributing factor to you being unable to afford the policy and leave you uninsured. Additionally, where fraud is the causation of the claim you could be facing a market rejection of your risk for insurance.
In either scenario, where you are uninsured the practice ceases trading but it does not cease its liability for projects previously undertaken. This is why a 6 year run-off period is the usual course undertaken.
You may of course choose not to incept a run-off policy, but the risk here is that you remain liable for work previously undertaken and a common law route may give itself to a third-party pursuing you personally. however this now enters the legal realms of which I am not professionally positioned to advise in any way.
If I can be of further assistance please do not hesitate to contact me direct on 07800 921912.