Caption Corner Part 17 – Vicarious Liability and Waivers
As licensed practitioners, there is no doubt that you should have a professional liability insurance policy to cover you for malpractice, a cyber or data breach insurance policy to insure you for HIPAA violations arising from third party information breach, and a general liability insurance policy covering your office, fire perils, bodily injury, and third party property.
This month we will continue to discuss some of the most important liability insurance terms that you need to know: Vicarious Liability and Waivers.
Vicarious liability is an insurance term that means a shift in responsibility from one to another based on an existing relationship. Vicarious liability is the responsibility for an action arising from an incident being shifted from a certain entity or person to another entity or person. This is also known as a contingent liability.
Relationship examples include employee to employer, child to parent, or independent contractor to business. Many NASW Risk Retention Group professional liability policyholders act as independent contractors or as employees of social work agencies or in clinical hospital settings as employees. They also act as practice owners with employees and independent contractors on staff.
Therefore, a relationship exists and so does vicarious liability. You as the owner of the practice then become liable for your employees’ and your independent contractors’ actions or inactions.
So what do I look for in my professional liability policy? Make sure that you have adequate malpractice liability coverage for yourself as a result of your practice having employees and/or independent contractors. Incremental coverage options are available with an incremental premium.
It is important to know that a malpractice professional liability policy does not cover employment incidents such as wage, overtime, salary or benefit disputes, retaliation, harassment, or workplace discrimination for example. If your practice wants coverage for these perils, you will need to buy an Employer’s Professional Liability Insurance policy.
A waiver is a voluntary surrender of a right or privilege that exists. An implied example in a professional liability insurance policy by virtue of the policy contract language is the insured waiving the insured’s rights to choose a preferred legal defense attorney at the expense of the insurance carrier, in lieu of the insurance carrier providing an assigned legal defense attorney at its own expense.
This is a common practice in the industry in order to control legal defense costs and to keep premiums low. Insurance carriers negotiate favorable legal defense hourly rates at a national level with skilled and thoroughly vetted attorneys who are expert in professional liability matters.
In other examples, the insurance policy has the waiver of subrogation rights by the insurer in favor of the insured in a deductible insurance policy. This means that the insurer is waiving its right to pursue other avenues for recovery from other parties in exchange for the insured paying a deductible for example.
Published April 2018