July 5, 2018

At the Booth…Tidbits and Nuggets on Professional Liability Insurance

We had a very successful 2018 NASW National Conference last month in Washington, D.C. where appetizing tidbits and nuggets of information were exchanged. Lots of action and helpful dialogue occurred at the NASW Assurance Services booth. We enjoyed the company of many people in the social work profession while helping many determine their insurance needs, assisting those who wanted to purchase a policy at the booth, and even sharing social work best practices and experiences.

This monthly TIP article shares our impressions with you.

First, a word about commercial lines of insurance which contains many types of products, with professional liability, malpractice, and errors & omissions being the top three sub-lines. At the NASW Assurance Services booth, we found that many people use all three of these descriptions interchangeably, so we need to discuss them briefly.

Here’s what they really mean.

Traditionally, malpractice insurance is for physicians and other medical professionals who practice invasive therapy and prescribe. Errors & omissions insurance is insurance coverage that has been traditionally written to cover professional and quasi-professionals such as lawyers, contractors, consultants, insurance agents, real estate agents, engineers, and architects. Professional liability insurance is predominantly written for professionals such as social workers, psychologists, life counseling service workers, clergy, and also depending on the carrier’s policy contract, investment advisors and real estate brokers.

Regardless of the name or label, all of these insurance products provide a common solution. That solution is to shift the risk of claims brought by third parties that allege some sort of professional negligence, or some sort of error in the delivery or administration of professional duties or professional oversite. The key to ascertaining this risk shifting is to determine the actual “Wrongful Act”, “Claim”, or “Professional Service”. These terms are defined terms in the insurance policy contract. That is why they are capitalized and often in bold print in the body of the insurance policy contract. Understanding the definitions is critical because professional liability insurance policies use the definition of “Professional Services” at the time of the loss and when the claim is filed. The claim will be denied if the loss does not originate from, and conform to, the policy contract definition of “Professional Services”.

Here’s where people get into trouble. They think that because they bought an “umbrella” policy or an “endorsement” to their policy for a specific peril, that they are covered completely. Umbrellas don’t cover much, even though the name sounds good. Endorsements are very narrow and are by design, limited in perils coverage.

It is critical that you match your risks and perils, called exposures, with an insurance policy that appropriately addresses and covers those perils and exposures. And watch out for loopholes in the contract. For example, beware of cookie-cutter professional liability insurance policies that supposedly cover you with a general liability section or reference, or general liability endorsement. Most often you are not getting real general liability coverage for perils that a stand-alone general liability policy or cyber liability policy covers. Also, look at all of the exclusions stated in the policy contract, and equally important, look for silence regarding certain coverage. If the coverage is explicitly stated, you know you have the coverage. You will find a lot of these issues when you read our competitors’ policy contracts.

Here is one interesting experience. A young, bright social worker professional we will call Jorge, visited our NASW ASI booth with a series of coverage questions seeking guidance. Although Jorge works for the Veterans Administration and does not practice clinically, he was savvy enough to seek out insurance coverage. Jorge rightly recognized the fact that his employer probably does not cover him for professional liability risks and negligence. Jorge is right. You cannot count on any employer covering you for anything. We have seen that problem many times while adjudicating claims.

After about 45 seconds of Q&A, we determined that Jorge is a W-2 employee with no moonlighting practice, and should buy an Preferra Insurance Company RRG Professional Liability policy with $1 million/$3 million limits. Jorge wanted to buy more coverage at $2 million/$4 million for a few dollars more per year in premium. So within a minute at the booth, Jorge used his credit card to pay $39.95 for a full year of coverage as an NASW member, and his 25-page Professional Liability policy and Declaration page were immediately emailed to him with his credit card transaction receipt, which we saw on his cell phone. Jorge could have bought the policy over the phone as well. But since he was at the booth, Jorge easily enrolled online at the booth and completed the 60-second buying process in no time at all.

Think about that again. A mere $39.95 bought Jorge a complete Professional Liability insurance policy for a whole year, so now he is not bothered about whether or not his employer covers him. He is covered. Every W-2 employee should buy a Professional Liability policy.

Now that is an easy way to get peace of mind, and to buy the best Professional Liability policy on the planet, and at the lowest cost. Jorge happily left the NASW ASI booth with a big smile that we shared too!

Published July 2018