Insurance Tips and Why You Buy
The social work profession is truly a noble one founded on service, integrity, and clinical expertise. At times, it can be a stressful and hazardous occupation. The nation is grateful for what you do, AND SO ARE WE! Thank you!
While reflecting on your recent summer vacation, it’s a good time to ask yourself why you buy insurance? Are you looking to comply with a state licensing requirement, a requirement by your employer, or simply your need for protection? Are you only price-driven, or do you evaluate your insurance policy to understand the actual benefits, limits, sub-limits, and value?
Here are a few tips to think about when you buy an insurance policy. First of all, let’s understand what “insurance” means. Insurance shifts risk from you to your insurance carrier. The insurance policy contract describes the covered risk perils (or shifted), the benefits, and the sub-limits and limits. Insurance provides guaranteed protection for a specific loss from a covered peril specified in the insurance policy contract. Insurance is a risk transfer technique that shifts the risk from the insured (You) to the insurance carrier that collects and pools premiums to pay for future losses. (Essentials of Property and Casualty Insurance, p. 22, Krauss, 2010).
Benefits in professional liability, general liability, and cyber liability policies include payment for legal defense expenses, various perils, and indemnity, which reimburses a damaged party to the extent of the loss. Every insured has specific reasons that drive the purchase of a certain insurance policy. It would be best if you prioritized your protection needs, and here are some basic tips.
If you have an office and/or deliver professional services and therapy in other locations, a General Liability policy is needed. For small practices, a great solution is a $1,000,000 per occurrence sub-limit with a $3,000,000 aggregate limit. Our experience shows that most practices and small businesses have low aggregate claims losses well under $1,000,000. Ensure that you get a zero deductible and have a fire peril limit per occurrence up to the $1,000,000 sub-limit. Many carriers have fragile fire protection in their general liability insurance policies because fire is a frequent and most severe claim.
The NASW Risk Retention Group General Liability policy with a zero deductible covers you for fire up to the $1,000,000 sublimity, and there is no limit on the number of fire claims in a policy period, unlike other competitors who only allow one fire claim in a policy year and have a fire limit under $500,000. You will also see that when compared to other General Liability policies that, unlike the competitors, the NASW Risk Retention Group does not underwrite based on a number of offices, employees, or locations; that the NASW Risk Retention Group General Liability policy is a stand-alone policy, and it is the lowest price in the nation.
Claims in general liability and medical malpractice, which includes professional liability, are dominated by bodily injury claims which have high exposure to medical and wage inflation, according to the world’s leading reinsurer, SwissRE. (Insurance Journal, August 2, 2021, p.26) Insurance carriers, except the NASW Risk Retention Group, have onerous underwriting procedures and many questions concerning the number and types of office locations, office square footage, states involved, number of people working in the locations (and in some cases, a census with their names and occupations), and the number of people visiting the locations.
Every practitioner has client documentation. This is a huge responsibility. Congress recognized this responsibility and, in 2013, enacted the 45 CFR Part 160 HIPAA HITECH law that holds the practitioner liable for third parties who work in any capacity for the practitioner for documentation breach caused by the third party. The perils are very strict and include client notification costs, state and federal fines and penalties, ID theft protection subscription, security breach audits, and legal defense costs. This places every practitioner in a position of vulnerability based on any third party who has access to the client documentation either online, digital storage, or even physical paper files being moved or stored.
The NASW Risk Retention Group offers the nation’s leading cyber liability insurance product zero deductible for a meager annual premium. While the NASW Risk Retention Group has six zero-deductible cyber liability insurance plans to choose from, we recommend the Silver Plus plan that is a $15,000 sub-limit per occurrence with a $15,000 aggregate limit because most small practices have experienced single Cyber related loss claims below $15,000 and typically around $12,000. The premium for this policy is only $249 annually and even a lower premium for NASW members. Think about this tremendous value because a lawyer charges $250 to $800 per hour.
Are you covered adequately, and is the premium priced fairly by your professional liability insurance carrier? Professional liability insurance is more exposed to CPI inflation and social cost escalation from social justice jury verdicts, so loss reserves are exposed to spikes and the need to bolster high ratio to premium reserves. (Ibid). Insurance carriers rely on stocks and bonds to build up reserves to pay future claims. Rising inflationary pressures reduce investment values and particularly equity values the most. (Ibid) This contributes to huge premium price increases that we have seen since 2019, called a “hard market.”
On the supply side, policy benefits are reduced, deductibles are added, and additional premium charges are added to buy a zero-deductible policy. The insurance carriers are nibbling around the policy coverage to water it down on the supply side, and they also charge you more premium on the demand side. This means that you need to make sure that your insurance carrier has at least an “Excellent” A.M. Best rating like the NASW Risk Retention Group, and you need to compare the actual coverage features and pricing of the policies side by side. Moreover, make sure that you have adequate general liability coverage strong enough to be its own stand-alone policy.
That is real general liability insurance protection. Too often, we see insurance carriers add small fragments of general liability coverage to a professional liability insurance policy coverage in the form of an endorsement that is not sufficiently wide and deep to provide real general liability protection. The key general liability perils covered should be property damage, bodily injury, personal injury, fire liability, advertising injury, at least $1,000,000 per occurrence, and $3,000,000 in the aggregate. All of these perils, along with legal defense costs, are covered by the NASW Risk Retention Group and with a zero deductible, which means you get first-dollar coverage.
Thank you for all that you do as first responders and as behavioral health and social work providers. It is truly a noble profession needed now more than ever. Good luck and stay healthy!