Short answer
A notice of circumstances is a report to your insurer about something that could become a claim. On a claims-made policy, reporting during the policy period may tie a later claim to that policy, and waiting may put coverage at risk. Read your policy’s reporting section and ask your agent, since wording varies by policy and insurer.
Is a complaint a claim, and does a notice of circumstances apply?
A complaint is not usually a claim, but it may still need to be reported. A claim is often a written demand for money or services, a lawsuit or something similar. Check how your policy defines it.
A circumstance is something that could reasonably lead to a claim. Examples include an owner complaint that names your design, a threat of legal action or a contractor’s letter blaming your drawings.
Many A&E policies let you report a circumstance. If a claim comes later, it may be treated as made during the policy you reported it under. The IRMI glossary offers general background on claims-made terms.
Example: a hypothetical mechanical system complaint
An architect hears from an owner who is unhappy with how the mechanical system is performing. The owner mentions possibly going legal, but no demand has been made. The firm calls its agent, who sends the policy, the carrier’s claims contact and a short list of what to include.
In this hypothetical, the firm reports the issue as a potential claim that week. Whether the policy responds to any later claim depends on its terms, exclusions and underwriting.
Why is waiting the risky choice?
Claims-made policies respond to claims made and reported during the policy period.
Your renewal application will likely ask whether you know of anything that could become a claim. If you knew and didn’t report it, the new policy may exclude it.
What should you send when you report?
- Your firm name and policy number
- The project name and address, and your role on it
- When you first learned of the issue, and from whom
- What is being alleged, in plain words
- Copies of letters, emails and notes
What should you avoid while it plays out?
- Don’t admit fault or write that something was your mistake.
- Don’t promise to pay for repairs or offer a fee credit before talking to your insurer.
- Don’t delete or edit project files. Keep everything.
- Do keep working professionally with the client. Reporting is not an accusation.
If the complaint started over an unpaid invoice, see our article on getting paid without starting a claim.
Will reporting raise my premium?
A reported circumstance may come up at renewal. An unreported one that turns into a claim may not be covered at all, so reporting is often the safer path. Some policies offer pre-claim help, such as early legal advice, so ask whether yours does.
Our article on who defends me if I’m sued explains how defense counsel is usually assigned once a claim is made. For general consumer resources, your state insurance department may help, and the NAIC directory of state insurance departments lists each one.
How does Hardcover help with a potential claim?
Send the matter to claims@hardcoverins.com. We point you to the right carrier contact, help you write the report and follow up until the carrier acknowledges it.
What to check
- How does your policy define a claim and a circumstance?
- What does the reporting section say about timing and format?
- Has anyone threatened legal action or blamed your design in writing?
- Does your renewal application ask about known circumstances?
- Do you have the carrier’s claims contact on hand?
Related questions
The owner says it might go legal. Should I tell my insurance now or wait?
If the issue suggests a claim could follow, usually yes. Read your policy’s reporting section and ask your agent how to report it.
What is a notice of circumstances?
A report to your insurer about something that could become a claim. On many claims-made policies, a later claim is then treated as made during the policy you reported it under.
Should I report a client complaint to my professional liability insurer?
If it suggests a claim could follow, usually yes. Read your policy’s reporting section and ask your agent.
If I report it and nothing happens, does it count against me?
A reported circumstance may come up at renewal. Underwriting varies by insurer, so ask your agent how yours treats it.
Does reporting a potential claim raise my premium?
It may come up at renewal. An unreported issue that becomes a claim may not be covered at all.
Who do I send this to, you or the insurance company?
Your policy lists how and where to report. Your agent can help you prepare the report and point you to the right carrier contact.
What should I avoid saying to an unhappy client?
Avoid admitting fault, promising repairs or offering money before you talk to your insurer.