Professional Liability Insurance Key Elements

Professional Liability Insurance is the risk management tool used to protect someone who possesses a professional knowledge, or skill, special ability, education, or experience is usually designated as a professional. Usually this person has ability above and beyond the norm. There are certain professions that are of a professional nature come to mind quite quickly such as; attorneys, doctors, engineers, and accountants.

The four elements of all negligent claims in United States include:
1. A legal duty that is owed to someone,
2. A breach of that duty that was owed,
3. Some kind of injury or damage that is suffered by a third-party and
4. Finally there must be a connection or causality between the proximate cause of injury and the legal duty owed.

Loss exposures from professional liability claims usually come from some type of contractual liability or from advice related liability. The standard that is usually used in professional liability claims is “what is the standard that is usual and customary and reasonable for that profession in that situation in that locale”. A doctor in downtown Manhattan might have a different standard of professional conduct than a doctor out in a rural town in Wyoming. Normally when a physician refers the patient to a specialist, the referring physician is off the hook with regards to malpractice that might manifest from the specialist activities. Some of the common claims against doctors are for such things as missed diagnoses or non-diagnosis. Those kinds of claims are by far the most common malpractice claims against doctors. There are obviously malpractice claims for improper surgical errors or improper and incorrect use of drugs, chemicals and treatments for the patient.

Professional liability insurance typically covers the medical professional against claims and damages arising from their professional acts or omissions and from acts and omissions of their employees, assistants and fellow physicians in the practice. Almost all of these policies are written on a claims made basis and are not written on the typical occurrence type policy. Usually for an increase in premium, the doctor’s malpractice insurance can have a provision which allows a doctor to consent to settle versus the insurance company being able to make a payment just to make the claim go away. It is important in all professional liability policies to ascertain whether or not the defense costs are included within the policy limits or are outside the policy limits. Clearly having the defense cost outside the policy limits provides a lot more coverage than combining the limits and the defense cost all into one amount. For doctors and physicians professional liability policies can usually be written so that the insuring agreement covers the individual doctor and/or physician and the organization that the doctor works for. Usually that can be their private practice or the hospital.

There are some common defenses that doctors can use when it comes to professional liability lawsuits and claims. One such defense is the statute of limitations. Depending on the type of claim there can be a defense that the statute has run out. Most states have contributory negligence laws which would allow the physician to be exonerated if the claimant in any way contributed towards the claim. On almost all surgeries and there is an informed consent and an assumption of risk form that is signed by the patient and that can sometimes reduce or eliminate the risk for the doctor. Most states have Good Samaritan statues whereby if the doctor is performing a medical service without compensation such as in an emergency, that can allow the doctor to not incur a professional liability exposure.

Finally, the negligent claim requires that all four elements are present, meaning there must be a legal duty and a breach of that duty that causes injury or damage and has been caused by the doctor.