South Africa: When does indemnity arise under a claims-made policy?

In February 2026, the High Court in Cape Town confirmed that under a claims-made professional indemnity policy, cover is triggered when a claim is made and reported to the insurer not when the underlying negligent conduct occurred. A retroactive date of cover does not extend the period of insurance. It permits claims arising from historic conduct to be covered under the active policy, provided notification requirements are met.

In The Collection at D’Aria (Pty) Ltd v Cross Point Brokers (Pty) Ltd, an insurance broker assisted two restaurant owners in procuring commercial insurance policies in June 2019. The policies did not include an extended business interruption clause. When the Covid-19 pandemic caused significant revenue losses, the restaurant owners discovered they had no cover for business interruption and complained to the broker in January 2021.

The broker held professional indemnity insurance with an insurer under successive annual policies. The 2020 policy (1 September 2019 to 31 August 2020) contained no Covid-19 exclusion. The 2021 policy (1 September 2020 to 31 August 2021), however, introduced a broad exclusion removing cover for any claim directly or indirectly related to Covid-19. Both policies carried a retroactive date of 1 September 2008. 

The restaurant owners' claims were made against the broker on 30 June 2021, and the broker notified the insurer on 1 July 2021 both dates falling within the 2021 policy period. The broker argued that its right to indemnification had vested under the 2020 policy because the negligent conduct occurred in June 2019, and that the retroactive date effectively extended the period of insurance back to 2008. 

The court rejected this argument. It found that the policies were claims-made policies, meaning the operative policy is the one active when the claim is made and reported. Because the claim was made and notified during the 2021 policy period, the Covid-19 exclusion applied, and the broker was not entitled to indemnification.

The retroactive date does not extend the policy period. It sets the earliest date from which historic negligent conduct may be covered under the active policy. The court found that the broker had breached its notification obligations by failing to alert the insurer of circumstances likely to give rise to a claim when the restaurant owners first complained in January 2021. This breach was material and would independently have entitled the insurer to repudiate the claim. 

For policyholders and brokers in particular, this judgment underscores the importance of understanding the claims-made trigger, the limited function of retroactive dates, and the critical need for timely notification of potential claims.

An insurance and reinsurance lawyer at Deneys in South Africa, Jakop focuses on complex insurance disputes and advisory work across coverage, liability and reinsurance lines, including aviation‑related disputes.