Importance of cover continuity
You’ve decided to take a break from teaching Pilates as you’re travelling overseas for a little while. While on leave you receive an email to renew your Pilates Alliance Australia (PAA) membership and Professional Indemnity Insurance policy.
You’re on break and not teaching, so why would you bother to renew your membership and insurance policy? You decide to let your insurance policy lapse.
A few days later you’re notified a claim has been made against you for a client you were teaching six months ago. Unfortunately, you’re not covered as you don’t have a current active insurance policy.
Claims made policy
Professional Indemnity Insurance is a claims made policy. This means the policy only provides cover for any prior acts as long as you have an active policy at the time of a claim. It’s therefore important to ensure you have a policy in place should you take a leave of absence (a break from working in Pilates). This will ensure you’re covered should a claim arise during this time.
What kind of leave?
When going on leave you need to consider whether it’s permanent leave or temporary leave. Either way you should notify your insurer as changes will need to be applied to your policy to ensure you have cover continuity.
Temporary leave refers to taking leave where you’ll likely return to work at some stage. This could include parental leave, study leave, travelling or simply taking a break. If taking temporary leave, you should continue to maintain an active insurance policy. As highlighted in the example, if you let your cover lapse while on leave you won’t be covered should a claim arise. You’re only covered for past activities if you have an active policy at the time of the claim, not at the time of the incident referred to in the claim.
Permanent leave refers to leave where you have no intention to return to work. This usually refers to retirement or permanently ceasing work. In this case, run-off cover will help should a claim be held against you in the future. It’ll keep you covered without having to maintain an active insurance policy year-on-year.
Who do I contact?
If you are a PAA member with a BMS insurance policy, please contact the team on email@example.com or call 1800 940 764. One of our friendly brokers will be able to assist you in ensuring you have the right cover in place.
In arranging this insurance for our members PAA is acting as a distributor of BMS Risk Solutions Pty Ltd (BMS) AFSL 461594, ABN 45161187980. The insurance is issued by BMS under binder with Certain Underwriters at Lloyds. When acting under a binder BMS acts as agent for the insurer and not as your agent. This is general advice only and BMS has not considered whether it was suitable for your particular objectives, needs or financial situation. Please read the Policy Wording and Financial Services Guide before making a decision about purchasing this policy.