At the moment all is quiet, there is calm after the storm and the new solicitors' insurance market is finding what it has got itself into.

Many solicitors are basking in the warm glow of savings on their indemnity premium.

The panic of the last few months has subsided.

The policy can be forgotten and put away for another 12 months.

But what if a claim should come along? What is a claim and do you know one when you see one? And when should you notify your insurer?If you are unsure of the answers to these questions, you are not alo ne.

Under the Solicitors Indemnity Fund (SIF), the obligation was to notify claims when they were made.

Solicitors had a fairly relaxed attitude to their reporting obligations.

They would often take the view that the claim was without merit and therefore not worth reporting only to have a rude awakening at a later date.

Or they would decide to deal with the claim themselves not appreciating its potential value.

Often they would simply not see that there was a claim against the practice because the letter of claim did not say in big red letters: this is a claim against the firm.In the past the solicitors' profession has had fairly gentle treatment from SIF on this issue -- and old habits die hard.

There is a lot of talk of the new insurers being rather kind in relation to the premium they have charged for cover.

We may find that they are less charitable at the other end of the transaction if a solicitor does not have a rigorous attitude to the way claims against the firm are handled internally.One profound change that the profession will have to cope with in the open market is the obligation to notify insurers of circumstances which may give rise to a claim.

If in the past solicitors have found it difficult to recognise claims, what chance is there now? Notifiable circumstances can be difficult to recognise.

So what should solicitors notify and when should they do it?The two questions to ask are:-- Is this something which the policy covers?-- Is this a circumstance or claim which I have to notify?Scope of coverThe policy covers civil liability.

In practice this does not mean just negligence claims but can, for example, include libel or breach of undertaking.Subject to a few exceptions in each case, most policies exclude:-- Death or bodily injury (this is after all a professional indemnity policy);-- Disputes with your current or former partners;-- Claims by employees;-- Debts and trading liabilities;-- Fraud or dishonesty -- but innocent members of the firm are covered;-- Undertakings for your own benefit, but again, those not involved in them may be covered.There will also be other exclusions.

Check the policy for the precise wording.Is there a claim or circumstance?The minimum terms define a 'claim' as: '.

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a demand for or an assertion of a right to, civil compensation or civil damages or an intimation of an intention to seek such compensation and damages.'Most are easy to spot, but others are not.

For example, solicitors must realise that they should also notify insurers where, for example, a bank notifies the firm that it will recover any shortfall when a mortgaged property is sold.Circumstances can be harder to spot.

The minimum terms describe a 'circumstance' as: '.

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an incident, occurrence, fact, matter, act or omission which may give rise to a claim in respect of a civil liability'.Solicitors should therefore notify insurers in the following examples:-- A client is liable for hire charges on equipment which he transferred when he sold the business because the solicitor forgot to ask the hire company to release him; but the solicitor thinks he should be able to get the money off the buyer.-- A solicitor allowed default judgment but thinks he can sort it out by bringing a claim against another party for indemnity.-- A solicitor has missed a limitation deadline but thinks there may be a technical argument that time has not yet expired.A solicitor's client has been debarred from calling a witness because the solicitor missed a time limit but it may still be possible to negotiate an acceptable deal before trial.What happens if a firm fails to notify?The policy will probably say that if the firm delays in notifying circumstances or claims, the insurers can recover any additional expense incurred in resolving the claim.

For example, the insurance company might say that early notification of a missed personal injury limitation period would have resulted in a successful application for discretion under s 33 of the Limitation Act, which would have avoided the claim altogether except perhaps for the cost of the application.Even worse, the solicitor might find that the firm is caught between two stools if it has changed insurer.

Company A which insures the practice for the year 2001-2002 says the firm should have notified circumstances to Company B which insured for 2000-2001 and that company says in turn that the firm should have notified the SIF.

The firm may face great uncertainty, the cost of sorting out the mess and an expensive action from the insurer which foots the bill at the end of the day.The benefits of early notificationEarly notification means that investigations can be undertaken promptly and are more likely to be productive.

The input of an objective third party is often invaluable.

There may be remedial action to be taken, for example, rectification of a will which will avoid the claim altogether.To sum up, solicitors should not forget about insurance just because the firm has made its choice of insurer (and possibly made a saving).

Somebody in the firm has to take ownership of the issues.

There is a lot of learning for the profession to go through and there will be casualties.

Practices need to think about claims every time there is a complaint or something goes wrong.

There is little to be lost by taking a conservative approach.

Consult a broker, but remember: if in doubt notify.