How to Read and Understand
Your Professional Liability Insurance Policy

Professional Liability Declarations

This part of the insurance certificate shows the covered person and his/her address; the professional occupation for which the person is covered; and the period of time that the coverage is in place. It also shows the company's limits of liability for all coverages provided and lists endorsements to the insurance certificate which contain information required by the state in which you practice or which modify the coverage provided in some way.

Coverages

This section tells you what the company agrees to insure you for. The professional liability coverage agreement provides protection for professional liability claims which might be brought against you for bodily injury to a patient; damage to a patient's property, and personal injury to a patient such as invasion of privacy, libel, or slander. The company will pay amounts you as the insured are legally required to pay as damages for covered claims or suits resulting from injury that arises out of the profession named under the "Professional Occupation" cited in the policy's Declarations. There are limitations and exclusions which apply to this protection. You should read your insurance policy carefully to determine the extent of coverage provided to you and other protected persons.

Important Definitions

When reading a policy, you will note that the insurance company has bold-printed some of the words. This is because the insurance company believes that these words are important enough to warrant a definition. You must be sensitive to the fact that it is the insurance company's definition of a word that is important, not the meaning that you may attach to the word, as the company's definition will be the one used in a claim situation. Some of the terms in the policy are defined as follows:

• Claims means a demand which seeks damages. The demand is generally in the form of suit papers received from an attorney representing the person allegedly injured; or in other words you are named in a lawsuit. It does not mean that you are guilty of negligent act

• Damages means monetary compensation to others.

• Defense costs means all reasonable and necessary costs incurred in the investigation, defense and negotiation of any covered claim or suit. They include, but are not limited to, attorney feed, witness fees, expert fees, travel costs, medical examinations, police or investigative reports. The company will pay these costs in addition to the limits of liability. This means that the limits of the company's liability will not be reduced by the payment of these amounts and the limits of liability are therefore completely available to pay damages. With a Maginnis policy, the following benefits/costs will also be paid in addition to the limits of liability:

  • Loss of earnings reimbursement - pays up to $500 per day (maximum $7,500 per incident) for attendance at a trial, hearing, or arbitration proceeding for a covered claim.

  • Defense costs paid up to $2,500 per incident, $5,000 per policy period if you are required to appear before a state licensing board or a government regulatory body (not available in New York).

  • Up to a $1,000 for medical expenses related to bodily injury to you or damage to your personal property if you are assaulted on your work premises or on ways immediately adjoining the work premises, such as a parking lot.

  • First aid reimbursement up to $500 for medically related expenses for first aid rendered to others as a result of any bodily injury to another as covered by the policy. If someone is injured and you incur expenses in providing care, you will be reimbursed for up to $500 of those costs.

  • Up to $250 per incident if you unintentionally damage someone else's property during any non-business pursuit.

• Incident means injury or death that results from providing or failure to provide professional health care services in the capacity of the profession named in the certificate's Declarations. This includes your service on a formal review board or committee that is responsible for the professional qualifications or performance of others.

For example: A nurse applies to the facility where you are employed and serving on the committee responsible for granting privileges. The committee refuses to grant approval and the nurse sues both you and the facility for damages. The company will pay defense costs and damages you are required to pay up to the limit of coverage that applies as long as your opinion was rendered in the capacity of your profession.

• Insured means the policy holder.

• Occurrence form coverage means you are covered for lawsuits filed at anytime for an incident which occurred during your policy period, even if the lawsuit is filed years from now.

• Suit means a civil proceeding which seeks damages. It also means an arbitration proceeding.

Exclusion - What the Policy Won't Cover

Following is a list of pertinent exclusions; it is not all of them. A policy holder should read the insurance certificate carefully in order to determine what the coverage exclusions are.

• Contract liability. The company won't cover claims or suits that result from professional liability of others assumed under any contract or agreement. But this exclusion does not apply to liability which is entirely the result of professional healthcare services that you provided or should have provided. This policy only covers you.

• Absence of licensure/certification. The company will not cover any claims or suits unless you are properly licensed or certified by the state(s) in which you practice.

• Professional occupation. The company will not cover any claims or suits resulting from the practice of an occupation or profession unless it is the profession that appears on the Certificate's Declarations. This means that you should notify your insurance company if you change professions during the policy period so that the Company can endorse your insurance certificate to show the change.

• Inappropriate behavior. The company will not cover any claims or suits that result from your physical assault, abuse, molestation, habitual neglect, or sexual assault. In addition, any behavior which threatens, intends to lead or to culminate in any sexual act whether intentional, negligent, inadvertent or committed with belief that the other party is consenting is not covered. The company will provide you with a defense for such allegations unless a judgment, final adjudication, or admission of guilt establishes that the policy holder caused the injury. The insurance company will not, for any reason, pay damages.

Reprinted with the permission of Kirke-Van Orsdel, Inc., Maginnis and Associates