Caption Corner – Insurance
As licensed practitioners, there is no doubt that you have a professional liability insurance policy, a cyber or data breach insurance policy to insure you from HIPAA violations for third party information breach, and a general liability insurance policy covering your office, bodily injury, and third party property.
This month we will discuss some of the most important liability insurance terms that you need to know.
Insurance Agent or Insurance Agency
This party is licensed in the state(s) in which it sells insurance. The Agent does not take the insurance risk. The insurance company also called the carrier creates the insurance product and takes the risk. The carrier appoints the agency to sell its insurance products and sometimes collect the premium from you. When you buy an insurance policy from an agent, find out who the carrier is and its reputation. Also, ask the agent what the commission rate is that the agency receives from the insurance carrier. The higher the commission rate, the more you pay in premium. The insurance agent or agency is simply a commission paid sales intermediary whose allegiance is to the carrier who pays the agent the sales commission. Remember that the insurance carrier appoints the agent, and the agent, therefore, works for the insurance carrier. The NASW RRG which is owned by its policyholders and NASW Assurance Services have the lowest costs in the industry because they are not driven by Wall Street profits. Agents take no insurance risk and are focused on their own commission from selling an insurance policy to you.
Hazards and Perils
These are the reasons why insurance exists. Insurance policies are contracts between the insured or policyholder, and the insurance carrier that shifts certain risks from the insured or policyholder to the insurance carrier in exchange for premium dollars paid by the insured to the insurance carrier with part of the premium going to the insurance agent in commissions. A Hazard is any exposure that increases the possibility of loss. For example, maintaining your client records in a file cabinet or with a third party storage facility, or on a data storage company’s records server all expose you to HIPAA information breach liability. A Peril is a cause of loss that arises when an incident occurs. This can be a client records breach, a licensing board inquiry, a subpoena for records, a deposition, a fire in your office, a slip and fall in your office, stolen property during an office therapy session or conference that you are holding in a hotel conference room, a misdirected fax of client information, or getting caught up in a client divorce proceeding.
Perils are wide ranging. Insurance carriers make more money by selectively excluding certain perils that are common. They also limit coverage for certain perils to such a high extent that coverage is defacto nonexistent. They do this by covertly writing their policies in confusing language or simply overtly expressly excluding certain coverage. Contrary to this philosophy, the NASW RRG offers “comprehensive” coverage in easy to understand and clear language in all of its insurance products. “Comprehensive” in this insurance context means a generously wide and deep coverage for perils.
You must look very thoroughly into your policy contract language to understand what the insurance carrier has carved out (written exclusion), or inferred out (silent), and what the insurance agent did not tell you what was excluded. Remember, the insurance agent wants to sell the policy to earn a commission. Your coverage needs are secondary. Here are some examples. Most professional liability policies and also those that say that they have general liability coverage, except for the RRG policy, exclude coverage for misdirected faxes, HIPAA information breach, subpoenas, and slip and falls. Some carriers exclude cover for a slip and fall unless the incident occurs in the therapy office during the actual therapy and only for the client. This is an overly limited coverage which borders on vapor coverage.
Limits and Sub-Limits
The limit is the largest, or aggregate amount that the insurance carrier will pay for a covered loss under the insurance policy contract. Many policies have multiple limits such as per incident or per person. Many policies limit the actual number of occurrences or incidents in a given policy year period. A sub-limit is part of, rather than in addition to the policy limit. These are extra limitations regarding certain losses. For example, the RRG Professional Liability policy with a $1million/$3 million limit allows up to six Deposition claims to be covered in any policy year with a sub-limit of $5,000 per Deposition claim, for a total of $35,000 of sub-limit Deposition coverage in any given policy year. The RRG General Liability policy has a $1million/$3million limit with no limitation on the number of fires within the scope of perils. Other insurance carriers limit fires to only one incident per policy year and impose a $50,000 sub-limit. The NASW RRG has a $1 million sub-limit on fire claims during the policy year period and again, no limit on the actual number of claims incidents arising from a fire peril.
This is a formal request to the insurance carrier by the policyholder or insured, based on the terms of the insurance policy contract. This is where the actual coverage aspect gets complex and is called into question. Insurance companies lose money when claims are presented, and therefore insurance policy contract interpretations by carriers’ claims departments have a habit of developing “loopholes” for the carrier to hide behind in order deny claims being paid. This is why they write their insurance policy contracts with exclusions, and often covertly confusing language to achieve additional exclusions. The NASW RRG is owned by the policyholders and no such attempts exist.
This is where the insurance policy contract language is critical. Hidden meanings and inferences that support non-coverage, and confusingly written exclusions enable carriers and insurance agents to convince you that you have coverage when you really do not have coverage. There is a direct inverse correlation between the selected risk exposure that the insurance carrier accepts in the policy and what you actually perceive to be the case. Moreover, the less risk that the carrier accepts, the more profit the carrier makes.
Talking with an insurance agency that you can trust like the NASW Assurance Services agency will give you peace of mind because this is where social workers come first.
Published December 2016