Professional Liability Insurance - Protect Yourself

Even the most dedicated professional can become the target of an unsatisfied client or patient. Professional liability insurance is necessary to protect your business or practice from the litigious pitfalls that you may encounter in your business.

Medical malpractice insurance is professional liability insurance for medical professionals. In past decades the need - and cost - of medical malpractice insurance has made it an integral part of costing out a successful practice. Med mal awards have made even practicing medicine difficult for small practitioners. It is imperative to have a carrier who will rigorously defend your business in all claims, in an effort to ensure that your practice may continue to thrive.

Most other professionals, such as contractors, internet freelance designers, brokers and the like, carry insurance known as Errors & Omissions insurance. E&O operates the same as medical malpractice, insuring your business against claims that may arise from the day-to-day performance of the job. Since many of the industries covered by E&O insurance may incur claims without triggering coverage by general liability insurance for bodily harm or physical damages, it is necessary to carry adequate professional liability insurance to help protect your business. Claims of negligence, breach of contract or violation of good-faith practices could result in substantial losses for clients, who often try to recoup those losses through claims against contracted service providers. This is where the professional liability insurance carrier becomes involved to help defend against such claims, and to bear the brunt of the expense for damages.

Since the provider only covers to the maximum benefit of each policy, it is important to thoroughly research the history of claims and awards in your industry. Like any shrewd business decision, selecting a carrier and policy limits for you professional liability insurance carrier should not be a choice made in a vacuum. Much of the research for the decision can be made on-line at a time that is convenient for you. Once you have determined the parameters for your coverage, you can begin to evaluate which insurance carrier works best with your business model and field.

Selecting professional liability insurance is one of the most important aspects of any successful business. No matter how well you think you have prepared for the future of your business, there is no way to be certain what lies ahead. It is crucial to protect your business, your livelihood and your investment with insurance designed to fight for you in these inopportune situations. Focus on growing your business, and allow your carrier to protect your time and investment.

Claims-Made Vs Occurrence - Types of Medical Professional Liability Insurance

In addition to homeowners insurance and auto insurance, medical professionals like physicians and surgeons often require medical professional liability insurance. Professional liability insurance, also referred to as medical malpractice insurance, protects them against loss resulting from acts, errors or omissions in their performance of professional duties.

When purchasing medical professional liability insurance, physicians have two options-claims-made policies or occurrence insurance. Deciding between claims-made and occurrence may not always be easy, so it's crucial to consider the important points that pertain to each type of coverage to determine which will best suit your specific needs.

Claims-Made Policies

- Increased limit of liability - Physicians have the opportunity to increase their limit of liability, which determines how much their insurance company will pay to settle a negligence claim, and how many claims it would settle in one policy period. Considering that many doctors feel more comfortable with higher limits, an increased limit of liability can determine whether a claims-made policy is right for you.

- Discounted premium - Claims-made policies offer an initial cost savings for the first four years. This is because insurance companies understand that the chance of a claim being filed during the first few years is slight, but increases over time. The premium will gradually increase each year until the coverage becomes mature at five years and the odds of a claim being reported is much greater.

- Tail coverage - Since claims-made policies provide coverage only if the claim is first reported or filed during the policy period, physicians may need to purchase tail coverage to protect against claims made after the policy period ends. Medical professional liability claims often take a long time to develop, so a physician may not receive notice of the claim until years after the incident in question occurred. For instance, if a physician retires, allowing his/her insurance policy to end, and a claim comes in six months later, he/she will require tail coverage to protect against the claim.

- Possibility of free tail coverage - There is a chance that the physician will not have to finance the cost of tail coverage, since many medical professional liability insurance companies provide a free tail to a physician that has been insured with the same company for a specified period of time and has complied with the insurer's provisions. Many insurance companies also offer free tail coverage to retiring physicians aged 55 or older who have been insured with them on a claims-made basis for the five years proceeding retirement.

Occurrence Insurance

- Coverage is permanent - Occurrence insurance protects against claims resulting from incidents that occur during the policy period, regardless of whether the policy is still in effect at the time the claim is made.

- Avoid purchasing tail coverage- Since occurrence coverage is permanent, physicians can avoid the cost of tail coverage. Financing tail coverage can be quite expensive, costing up to 200% of the premium depending on the insurance company, so avoiding the cost of a tail may determine whether occurrence insurance is right for you.

- The insurance company's financial stability must be secure - Considering that occurrence insurance is permanent, it's necessary to have complete confidence in your insurance company's finances. Medical professional liability insurance claims can take years to develop after an incident occurs, it's important to feel secure that your insurance company will still be in the position to protect you years after purchasing occurrence insurance.

- Limit of liability remains unchanged - Unlike claims-made policies, the limit of liability at the time of purchase is the limit you will have when a claim is made, which is typically 3 to 5 years after the incident occurs.

There are many important points to consider when deciding between claims-made policies and occurrence coverage. Contacting a trusted professional liability insurance agent is the best place to start.