Professional liability insurance policies provide sophisticated coverage that will likely take a professional agent to decipher for you.
Many New York state professional organizations do not take the time to examine the professional liability insurance policies that they purchase. Lawyers, accountants, dentists, engineers and many other NY professionals purchase NY professional liability insurance policies (errors & omissions or malpractice) without deep knowledge of what risks they are actually covered for.
I’ve asked this question before:
“Would you bet your business on the fact that you’re properly covered by NY insurance?”
It is in every business owner’s best interest to sit with an independent insurance agent and have a detailed discussion of what is covered within his professional liability insurance policy, how his organization can mitigate risk, and what happens when there is an insurance claim.
Professional Liability Insurance Important Coverages
Claim Expenses Outside of Limit (CEOL) and First Dollar Defense (FDD)
Professional liability insurance policies, which include claim expense outside of limit and first dollar defense, contain the broadest possible insurance coverage language and avoid the limit of liability insurance being used to pay claim expenses.
What You Don’t Want
Many professional liability insurance policies provide coverage with the claim defense expenses inside the limit of liability insurance and make the deductible applicable to claim expenses. If you have one of these policies (which are very common, make no mistake), your firm will pay the deductible towards claim expenses and the whole limit ($500,000, $1,000,000, whatever) may be used to pay claim expenses which could potentially leave nothing to pay an indemnity payment should a claim come to that point.
This is a horror scenario for your organization
Imagine being sued and finding out through the process that your policy provided claims expense inside the limit. Your entire liability insurance limit is exhausted on defense costs.
With full CEOL/FDD, your business pays nothing out of pocket for claim expenses and the deductible will only be paid out if and when an indemnity payment is awarded to a claimant. This protects the full limit of liability from claim expenses and leaves the full amount available for an indemnity payment.
Which sounds better to you?
Call us today at (518) 456-6688 to find out if your professional liability insurance policy has claims expense outside of limit and first dollar defense language.
You can also click here to email us with questions or a quote request.
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