Pitfalls and Perils of a Professional Liability Insurance Policy
Are you absolutely sure that your PLI insurance policy protects you? You had better read your PLI insurance policy contract to verify that. Do not rely on the insurance broker who sells the policy to you because the broker is motivated by earning the commission on the sale, not on your welfare. The NASW Risk Retention Group’s mission it to make sure that the policyholders are properly informed about the insurance coverage since the NASW Risk Retention Group’s policyholders own the NASW Risk Retention Group.
In a previous TIP article called “Simple and Quick Reaction Steps If You Are Named in a Lawsuit”, we recommended that you conduct an audit of your insurance coverage at least every six months and determine if any coverage gaps exist. Coverage gaps mean that YOU are personally responsible and YOU stand alone. In last month’s TIP article, details about PLI and some General Liability policies were discussed.
Let’s talk more about Professional Liability insurance or PLI since this is the most frequently purchased insurance policy by social workers. Cyber Liability is also growing in popularity since information breach (third party as well as the first party) is a growing incident and claim, and all Professional Liability insurance policies need this coverage to help plug coverage holes.
First and foremost, beware of insurance brokers and insurance companies who do not disclose the full ramifications, exclusions, and defined terms of coverage of a PLI insurance policy contract to you. Insurance companies, particularly those that are driven by Wall Street earnings expectations, like Allied World, AIG, and the AON brokered HPSO and CNA policy, write strict coverage and often with very narrowly defined coverage definitions which leave you with less coverage than you thought you had. This fact has been reported by many NASW social workers.
The intention of insurance brokers and publicly traded insurance companies is to maximize their own profits. By narrowly defining a covered peril, using exclusion tactics, or defining a definition in the PLI policy so tightly, causes coverage to be removed in certain areas. The insured, YOU, are not covered when the claim arises because it falls outside of the narrow scope of defined coverage and the narrow scope of the definitions.
You will find this out when a claim arises and you wind up with no coverage and paying the claim out of you own bank account. Remember that the insurance broker is driven by commissions when the broker sells a policy, not your own welfare.
Ask yourself these questions in the context of example competitor PLI policies that we use for discussion and illustrative purposes called “ABC” carrier …
- Does ABC’s policy cover me for my General Liability risk limits and my Professional Liability risk limits like other insurance carriers in the industry? NO.The ABC policy limit is shared for PLI and GL related perils. The limits are not stacked. So your coverage limits are bleeding. If you buy ABC’s policy which says that it covers business liability and professional liability with a $1MM/$3MM limit, and you have a claim that is not PLI related, the benefit paid can exhaust all of your PLI limits so you have no coverage at all for malpractice professional liability claims. If you have a malpractice professional liability claim that uses up all of your coverage limits, then you have no general liability coverage at all. You are underinsured with the ABC policy. It is doubtful that your Landlord would accept your ABC general liability coverage once the policy language is read by the Landlord.
- If my client appears in my office for therapy and is accompanied by anybody else such as a parent, relative, friend, or guardian, and that person slips and falls in my office or down the hall, or in the bathroom, does the ABC Professional Liability and General Liability policy cover me?
NO. The ABC policy only covers “Business Invitees” as strictly and narrowly defined in its policy contract. “Business Invitee” is only the person (client) who is at your office for therapy and actively in therapy with you at the time the incident occurs. The Business Invitee must be actively engaging in “Professional Services” as strictly and narrowly defined in the policy in order for you to be covered. If the client slips and falls in your waiting room, or gets injured in the bathroom, you are not covered. If anybody else gets injured, you are not covered because they are not a client and not in active “Professional Services” therapy. The ABC policy is very narrow and leaves you without insurance coverage in many instances.
The NASW RRG PLI policy and the NASW RRG NASW GL policy cover all people in your office, or in your building, no matter what, and even in hotel conferences, therapy, and training sessions with clients, peers, or anybody else who you are holding sessions outside of your office. It does not matter if they are clients or not, and it does not matter if they are under active professional services therapy with you when the incident occurs. You are covered.
- Are my associates covered under my Professional Liability policy such as psychologists under ABC’s policy?
NO. Psychologists are expressly excluded as insureds, and not specifically listed as “Professional Services” in ABC’s policy.The NASW RRG PLI policy covers all psychologists, mental health workers, and social workers. The NASW RRG General Liability policy covers all occupations in the Allied Health category.
- What are “Professional Services” defined as in the very strict and narrow ABC Professional Liability policy?
Only social workers and mental health services are permitted. No psychologists are covered. They are specifically excluded. Many carriers only cover three activities:
The NASW RRG PLI policy provides many of the client related GL perils at no additional cost. Plus the NASW RRG GL policy provides an additional $1MM/$3MM in coverage for all of the major general liability perils. So for example, if you buy a $1MM/$3MM NASW RRG PLI policy and an NASW RRG $1MM/$3MM GL policy, you actually have twice the coverage in place overall: $2MM/$6MM, plus insurance covering many perils that are not covered by ABC’s policy.
- providing social work or mental health services with formal accreditation, credentialing or standards review or from similar professional boards or committees;
- publishing articles or books or broadcasting on radio or television activities directly related to Professional Services, or
- providing formal clinical teaching activities.This means that if you perform any other activities than those strictly listed above, you are not covered.
The NASW RRG PLI policy covers all psychologists, mental health workers, and social workers with very broad coverage. The NASW RRG General Liability policy covers all occupations in the Allied Health category with very broad coverage the same for all of these occupations.
Several Exclusions will hurt you. Many carriers do not cover Divorce Mediation Services, and if they do, only in a limited fashion, where you must follow a strict and heavily defined procedure of notices and written statements to all parties, and require that all agreements between the parties involved are reviewed by a lawyer, and you are responsible for paying for those lawyer fees.
Many carriers do not cover you for anything arising from an electronic dissemination of faxes, emails, text messages, or similar communications to the prospective patient, “Business Invitee” or any other third party. You are not covered for the dissemination of electronic information and backup tapes, optical media or portable media.
Many carriers do not cover any psychologists. They are expressly excluded from any coverage offered to social workers.Many carriers do not cover fire damages over $150,000 regardless of the number of claims presented under the policy. That means that you are underinsured for each incident and most probably only for part of one incident.
The NASW RRG PLI policy covers all psychologists, mental health workers, and social workers with very broad coverage. The NASW RRG General Liability policy covers all occupations in the Allied Health category with very broad coverage the same for all of these occupations. Also covered are all first party information dissemination incidents regardless of type. The NASW RRG insurance policies are very comprehensive.
Again, read your insurance policy contract, not just the Declarations Page, and look for the pitfalls. There are a lot of pitfalls in PLI policies that are offered by the competitors of the NASW Risk Retention Group. Conduct an audit of your insurance coverage. That means you must read the policy contract, not just the Declarations page.
You must understand the defined terms because if you do not, you will be tricked into believing that you are covered for certain perils which you are not. Make sure that you understand what you actually have coverage for. First and foremost, review your own existing insurance policies to determine what insurance coverage is stated compared to what you need and identify the gaps that exist for which you are not covered. This applies to your professional activity as well as your auto and homeowners policies, and even your life and health insurance coverage.
The NASW Assurance Services organization is committed to social workers and is not driven by Wall Street profit demands. The NASW Assurance Services organization offers all kinds of insurance with generous and liberal provisions, including professional liability, general liability, cyber liability, cyber device liability, term life, health insurance, and auto and home insurance.
The NASW Risk Retention Group’s liability insurance policies are clearly written and are bias toward you as the policyholder because the policyholders own the NASW Risk Retention Group. Profits from the NASW Risk Retention Group go back into more generous policy coverage and subsidize the premiums to keep them low for you.
The NASW Risk Retention Group offers a suite of policies including:
Professional Liability policy
Cyber Liability policy
General Liability policy
Cyber Device Liability policy
Published June 2016