(1) What's the difference between Professional Liability, Errors & Omissions, and Malpractice Insurance?
Professional Liability (PL) and Errors & Omissions (E&O) Insurance are terms used interchangeably to describe insurance covering any alleged mistakes, acts, errors or omissions on the part of the policyholder. The term Professional Liability Insurance is normally used for licensed professionals, and Malpractice Insurance is a term associated with professionals in the health field.
(2) What's a "claims made" policy? How is that different from most liability policies?
Most PL policies are written on a "claims made" basis. That means that your current insurance carrier will protect you when the claim is made, i.e., when the claim is presented for the first time, even if the alleged mistake, act, error or omission happened in the past. With most "occurrence" policies, the carrier that was insuring you when the incident occurred will be the carrier responsible for defending you now, even if you're sued after the policy expired.
(3) What's a "retroactive date"?
The retroactive or "retro" date shown on your current policy is the date from which your current insurance carrier will cover you when a claim is first made / first presented.
Let's say you had ABC Insurance Company from 12/1/2000 until 12/1/2009. You're now insured by XYZ Insurance Company. If the alleged mistake, act, error or omission happened on 10/1/2001, your current insurance carrier will cover you as long as the "retro" date shown on your current policy goes back to at least 10/1/2001.
Whenever possible, your "retro" date should go back to the date when you purchased your first PL policy.
(4) What happens if I cancel my PL Policy?
PL policies "self-destruct" once you or the carrier cancel your policy. That means if a claim is presented 6 months after your policy was dropped, you'll have no protection whatsoever! It's like you never had this coverage. There are some exceptions to this, such as buying a "tail" or "extended reporting period" coverage. But, for the most part, you'll be S.O.L.! (Look that up in your Funk & Wagnall).
(5) Is there a deductible? How does it work?
Most PL policies have a deductible. Some are as low as $250 per claim. The deductible usually applies to your defense costs (Attorney's fees, expert witnesses, etc.) as well as to paid claims - - payouts by your insurance carrier to the parties suing you. You are responsible for paying this deductible.
(6) What is "first dollar" defense?
In some cases, you do not pay a deductible for your defense costs (Attorney's fees, expert witnesses, etc.), regardless of whether you win or lose a lawsuit. This is what we call "first dollar" defense. Many PL claims are frivolous, so not having to pay a deductible for your defense costs can lessen the impact of being sued.
(7) What is a Third-Party Dishonesty Bond?
Most Dishonesty Bonds cover if your employee steals from your own company. Third-Party Dishonesty Bonds not only cover if your employee steals from you (first party), but also if your employee steals from your customer (third party). These Bonds have a Conviction Clause. Your employee must be found guilty in Criminal Court before the Bond will pay a claim.
Only a handful of insurance companies write Third-Party Dishonesty Bonds. We have them!
(8) What is Employment Practices Liability Insurance?
Employment Practices Liability Insurance (EPLI) protects your company against claims for job discrimination, unlawful termination, sexual harassment, ADA violations at the workplace, and other employment-related offenses. EPLI Policies come in many different flavors - - no two are alike. It's very important to review all the "fine print" before buying a policy.
Professional Liability and Commercial General Liability Policies DO NOT COVER employment-related claims!
(9) How do I get a quote, and how long does it take?
Most insurance companies require that you complete their own applications before they'll give you a firm quotation. We can get you "indications" (ballpark quotes) from most carriers using a competitor's application. In fact, that's how we at PRO do our comparison shopping on your behalf. Some companies respond in 24-48 hours, and some take weeks. The more time you have, the more proposals we can get for you.
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