See the GAP…
Not All Professional Liability Insurance Policies Are Created Equal
We recognize that the social work profession is a noble one, founded on service, integrity, and clinical expertise. It is stressful—and becoming increasingly dangerous. Thank you for what you do!
Pro-Tip
Identify key areas in a professional liability insurance policy—or any insurance policy, for that matter—that can make your premium quote vastly different. Key areas include deductibles, sub-limits, exclusions, definitions, vicarious liability, third-party versus first-party coverage, and conditions that include or exclude coverage eligibility.
There are three basic types of deductibles: no deductibles (or first-dollar coverage), flat deductibles, and percentage deductibles, which are becoming more popular. Obviously, choose the no-deductible option. There may also be perils that are excluded or simply not stated in the policy and are sometimes offered as costly endorsements.
When considering the purchase of a professional liability insurance policy—or any other insurance product—shop around and compare. It makes sense to ask your peers and reference groups, check chat rooms, evaluate each carrier’s website, and, most importantly, compare policy coverages and costs. Also, find out the carrier’s reputation for settling claims fairly and equitably.
Insurance policies are contracts, and contracts can be slippery. There are many loopholes, traps, disguised definitions, and unforeseen limits and gaps that are difficult to identify. It is worthwhile to place yourself hypothetically in a future situation and then frame the insurance policy around that incident to see if coverage applies. Ask: “Am I covered for this or not?” and “If I am covered, what is the sub-limit or per-occurrence limit?”
Shopping around is a common strategy most of us use when comparing auto insurance rates and policies. Auto insurance is a buyer’s market. Premium quotes from the same carrier for the same motorist can change every six months. It all depends on the carrier’s loss tolerance threshold and its appetite for written premium at that time.
There is one well-known auto insurance carrier that “opens the spigot” in fiscal quarters when it needs more premiums, simply lowering its underwriting standards to bring in more business. This is a short-sighted solution that generates immediate revenue, but it often leads to higher claims costs later. Some carriers hope incremental claims do not occur—or they attempt to buffer losses by exploiting policy loopholes and resisting equitable claim settlements.
Pro-Tip
This is when it becomes particularly important to be insured by an RRG (Risk Retention Group). Because you own the RRG, you benefit from its income in the form of lower premiums, no deductibles, enhanced coverage benefits, and no policy or administrative fees. Moreover, the goal of an RRG is to serve and protect its insured owners—not to maximize profits. Its income is reinvested into benefits such as premium freezes and expanded coverage.
Even a ballpark premium estimate can reveal add-on costs that insurance agencies and carriers include in your bill. For example, look for policy fees and administrative charges added to your invoice. This is a common revenue-generating tactic used to increase profits beyond actuarial expectations. Beware of these practices.
Many insurance carriers distribute their policies through agencies, which come in many forms—online aggregators, MGAs (Managing General Agencies), and TPAs (Third-Party Administrators). They all have one thing in common: they act as intermediaries, bringing in customers and collecting commissions. In other words, they all “dip their beak in the water,” adding to the overall cost of your policy.
Pro-Tip
Look for an insurance carrier that performs “straight-through processing,” or one that has streamlined operations so efficiently that outsourced servicing costs are minimal. This increases your chances of avoiding inflated distribution costs.
Finally, consider what other attributes matter when choosing an insurance carrier. Look for value-added benefits such as a claims helpline, a strong customer service center, professional education tools, webinars, helpful articles and publications, a learning center offering CEUs, a job board, and social workers serving on the company’s board and participating in underwriting and claims committees.
These are meaningful benefits that many for-profit insurance carriers choose not to offer because they reduce profit margins.
