than twenty years ago, few people had ever heard of a professional
liability suit. That has changed dramatically. In the past
fifteen years, directors and officers liability insurance
has become so pervasive that now more than 98% of all organization
whose stock is listed on the New York Stock Exchange purchase
this coverage. Professionals in virtually all occupations
now face liability arising from allegations of negligence
or improper conduct.
liability - liability arising out of rendering or
failing to render services of a professional nature - is excluded
under Commercial General Liability (CGL) policies. A variety
of professional liability insurance coverages has been developed
in recent years for many professionals, such as physicians,
surgeons, dentists, lawyers, accountants, architects, insurance
agents, directors and officers of corporations. Each policy
is tailored to fit a specific occupational need. Most policies
are written on a claims-made basis.
have two kinds of legal duty to their clients. These
are to perform the services for which they were hired and
to perform them in accordance with the appropriate standards
of conduct. Because of their special skills, professionals
are held to a higher standard of conduct.
Liability policies can go by several different names.
Malpractice insurance is the term commonly applied to Medical
Professional Liability policies written for medical professionals
or institutions, including physicians, nurses, dentists, surgeons,
opticians, optometrists, chiropractors, and veterinarians.
And Omissions (E&O) insurance is a broad term
that refers to Professional Liability policies written for
other professionals, such as insurance agents, accountants,
architects, stockbrokers, engineers, consultants, and attorneys.
type of Professional Liability policy, the Fiduciary
Liability policy, protects those who manage private pension
and employee benefit plans against liability for violation
of the federal ERISA law (the Employee Retirement Income Security
Act of 1974). There is also an obligation on the part of the
trustees or administrators of a plan to provide a bond to
secure the plan against dishonesty on their part or on the
part of another person entrusted with or having access to
plan assets. Such a dishonesty bond is mandated by federal
law and must be in the amount of at least 10% of the plan
assets or $500,000, whichever is less. However, Section 412
(a) of Erisa, which sets forth this requirement, exempts U.S.
corporations authorized to exercise trust powers or which
are subject to examination by the state or federal government.
liability claims have been only about 20% as frequent as D&O
(Directors And Officers) claims, and they have been significantly
less severe. The most common risks associated with administering
pension and welfare plans include:
denial of benefits * misleading representation * improper
advice to employees * improper expenditures
Malpractice and Errors And Omissions insurance cover loss
arising from professional acts or acts that fall within a
professional’s duties, it is extremely important to
distinguish between professional and nonprofessional exposures.
Unfortunately, courts have not always been consistent in their
interpretations. If the insured wants full coverage against
liability exposures arising from business, it may be advisable
for the insured to maintain both a Commercial General Liability
policy and the appropriate Professional Liability policy.
professionals believe that settling claims out of court is
an admission of an error that may harm their professional
reputations. In the past, Professional Liability policies
contained a provision that the insurer could not settle a
claim without the insured’s consent. Most policies now
provide that such consent is not required.
the frequency and severity of professional liability suits
continue to rise, insurance coverage and loss-reduction techniques
will become increasingly important to professionals and savings
institutions. Today, any savings institution, no matter how
small or how closely held, should carefully review its professional
liability exposures to make sure it has done all it can to
reduce and insure properly against them.
note that the precise coverage afforded is subject to the
terms, conditions, and exclusions of the policy as issued.
This explanation is intended only as a guideline. This information
is not intended to be considered investment, tax or legal
advice. It is provided, for your education only. This is not
an insurance contract. All terms and coverages are defined
solely by your policy.
more details, please call us toll-free 1-800-964-8614
to receive a free, no-obligation quote. Like so many satisfied
clients, we think you’ll be happy you did. Visit us
online at www.paulbalep.com, or e-mail us at email@example.com.
pays to shop around with PaulBalep Your one stop shop
for insurance and financial services”
is number one>>. We are nonexclusive producers who represent
an average of eight companies-not just one. PaulBalep
can evaluate and compare the products of several fine companies
to find you the right combination of coverage and value.