As pricing inflation in 2021 enters all spheres of the American economy, from consumer goods to real estate and everything in between, many in the insurance industry are asking, “How is this going to affect pricing with professional liability insurance?”
The answer isn’t that simple, as a wide range of liability policies have already been impacted.
How Expensive is Professional Liability Insurance for Those in the Medical Field?
“Social inflation particularly affects businesses perceived as having ‘deep pockets,’ so the insurance lines most affected are commercial auto, professional liability, product liability and directors and officers liability,” said Loretta L. Worters, vice president and spokesperson for the Insurance Information Institute. “Reliably quantifying social inflation for rating purposes is hard because it is just one of several factors pressuring pricing, making it challenging to tease out its actual influence from others. The most meaningful way to think about social inflation and its components is to compare their impact on claims losses over time with growth in an inflation measure like the Consumer Price Index (CPI).
According to Worters, there are two types of professional liability policies: claims-made and occurrence.
“Most professional liability insurance policies are ‘claims-made,’ meaning the policy must be in effect when the event took place and when a lawsuit is filed for a claim to be paid,” Worters said. “If, however, you change careers or retire, you may want to purchase an ‘occurrence’ policy that will cover any claim for an event that took place during the period of coverage—even if the suit is filed after the policy lapses.”
Medical Insurance Coverage And Pricing Inflation in 2021
Typical coverage for professional liability can include personal injury, punitive damages and related legal defense costs. However, it can also include more complicated business scenarios, such as alleged or actual negligence, copyright infringement, claims against services previously performed or against temporary staff and independent contractors.
Professional liability insurance pays the costs of legal defense against claims and payment of judgements against a business, up to the limit of the policy. Most policies have a deductible ranging from $1,000 to $25,000.
The coverage usually does not extend to non-financial losses or losses caused by illegal, intentional or dishonest acts.
“The amount of professional liability insurance you will need and how much it will cost depends upon the size of your business and the level of risk it poses,” Worters said. “You may be able to include professional liability coverage in a Commercial Package Policy as an endorsement. However, insurance prospects need to know that professional liability coverage is not included in an in-home business policy or Business Owners Policy.”
Professional Liability Insurance Plans Tailored to Your Needs
So, what is a high-quality professional liability insurance plan and what does it consists of?
It all comes down to the individual business; there is no “one-size-fits-all” solution or insurance policy.
“A high-quality policy is a policy that is specific to your specialization and protects the risk associated with your profession or business,” Worters said. “The insurer tailors the coverage to the most critical concerns of the business and the risks they are likely to encounter depending on their industry. That is why the policy costs, fees, and deductibles can vary significantly depending on the size of your business and the degree of coverage you choose.”
357 Comments