How to Complete Your Professional Liability Application... the Right Way

As underwriters for professional liability insurance, we see hundreds of applications every month.  Some of them are beautifully typed works of art, chock-full of useful quality information and others... well let's just say that they leave something to be desired.  Often we receive applications that are incomplete, unsigned, or have pages missing.

We often wonder why some professionals don't take more time to complete their applications properly.  Your application for professional liability insurance is a representation of you and a snapshot of how you manage your practice.  If this is the only document an underwriter is going to see and can impact how much you will pay for your professional liability insurance, why not take the time to complete it in a detailed and organized fashion as you would a document for a client or the court?

You spend hours working on behalf of your clients trying to produce the best possible representation of them in a legal matter.  You put on your best suit and clean off your desk to present yourself well to your clients, so why wouldn't you do the same when presenting yourself to an insurance company?  We know that, especially with lawyers, time is money.  Sure, you're not getting paid to complete an application for insurance, you can't bill yourself, but if you don't put the proper amount of time and effort into completing your application, you could overpay, possibly be declined coverage or not receive the proper coverages your practice needs.

Next time you are completing an application for your professional liability coverage, think about that underwriter who only gets to know you and your law firm from a piece of paper, and think about how they are going to perceive you.  The easier you make it on them, the better and quicker terms you will likely receive.  Also, the less time you are going to have to spend on the back-and-forth that often occurs with incomplete, illegible applications is more time you can spend working for your clients.  Make it easy for the underwriters and insurance companies, and in turn, they will most likely make it easier on you and your bottom line.

Watch out for that hammer!

Have you read through your professional liability insurance policy?  Probably not. After all who likes to read insurance policies? Often times we find that firms just want coverage in place regardless of what that coverage really is.  If it's cheap and 'good enough' they often take the policy.  While that may be temporarily good for their bottom-line, in the long run they are really just hurting themselves.  Unfortunately, you never know how good your insurance is until you need to use it.

Don't let yourself be surprised about your policy when you find that it doesn't cover you for XYZ.  All professional liability policies are similar, but they all are different too.  Each insurance company drafts their insurance policy with a few unique bells & whistles. You need to read your policy to know what it is you are buying.

One policy feature that I want to touch on today is the 'Hammer Clause'.  This is a provision included by insurers in some consent-to-settlement clauses to encourage the insured to accept a recommended settlement offer.  It provides that if the insured refuses a settlement offer recommend by the insurer, the insurer's liability is limited to the amount of the recommended settlement offer.

Example: The insurer recommends a settlement offer of $100,000.  The insured refuses the offer, and the claim results in a judgement of $200,000 against the insured.  The insurer will only pay $100,000, less any deductible. The insured is now responsible for $100,000, plus any deductible amount.

This may not seem fair to some firms.  Your name and reputation are on the line if a malpractice suit is brought against your firm.  If you know you are right, and just accept the offer because you don't want to be on the hook for the remaining settlement money, you are then admitting liability.  Look for insurance policies that remove the 'Hammer Clause', and modify the consent to settle provision so that it is in your firm's best interest.

There are many other intricacies of professional liability insurance policies, but that's for another post.  Have questions about your coverage or want alternate quotes?  Contact us toll free 800-727-0001 or www.ParagonUnderwriters.com.

Just Starting Out

This is it.  My first line of my first post on my first blog.  I hope I don't screw it up!  Starting something new can be difficult.  It can be scary, exciting, frustrating, and rewarding.  Much like this blog, if you find yourself starting something new you will probably feel these same emotions.

In my line of work I deal with lawyers and law firms.  I help them secure the insurance coverage's that they need to protect their firm's and their livelihoods.

If you are starting a new firm, as is the case quite often these days, you will now be the attorney in charge of securing the insurance for your practice.  If you were formerly at a larger firm this is something that was probably taken care of by the partners, or the office manager. You never needed to worry about being covered, you just always assumed you were.  Now that you're on your own, things are different.  Your livelihood is in your hands!  You're now a business owner and one of the biggest priorities of any business owner is securing insurance to protect the investment that you have made in your self and your practice.

When starting a new practice first and foremost make sure to obtain professional liability insurance to protect yourself and your firm from any potential malpractice claims.  Talk to an informed agent that knows about this type of coverage, to determine the right limits and coverage options that are right for your firm.

You will also need to obtain a Business Owners Policy (BOP) to protect the property and liability of your work space.  Depending on the size of your practice you may need a workers compensation policy, an employment practices liability insurance policy,or health insurance policies to protect yourself and your staff.

Starting out a new firm can be very daunting, but it can be very rewarding too.  Just like this blog entry, I guess all you need to do is get started!