Professional Liability Insurance

Internet Liability and Network Protection

(data breach) 1. provides cyber-liability coverage Provides the following coverages: 1. website publishing liability 2. network security liability 3. replacement or Restoration of electronic data 4. cyber-extortion 5. business income and extra expense

Types of Insuring Agreements for Directors' and Officers' Liability (or Management Liability)

1. A-side: directors and officers receive direct payment for defense costs and liability if sued or if indemnification isn't available under company's coverage 2. B-side: company is reimbursed for claims filed by directors and officers under corporate law or carter 3. C-side: (entity coverage) insures the company for its on wrongful acts 4. Kidnap/Ransom and Extortion Coverage Form

Fiduciary Liability (Difference from CGL)

1. ERISA (Employee Retirement Income Security Act) allows fiduciaries to be held personally liable for breach of duty 2. Administrators of employee benefit plans need fiduciary liability coverage (CGL protects the business, not the person)

Types of Professional Liability Insurance

1. Malpractice insurance 2. Errors and Omissions (E&O) insurance 3. Fiduciary Liability policy 4. Directors' and Officers' Liability (or Management Liability)

Example

1. What entities could bring an Errors and Omissions claim against an insurance agent? Companies an agent represents and clients they represent

Type of Coverage Typically Found in a Professional Liability Policy

1. Wrongful acts, errors, or omissions the insured commits (and in some cases Bodily Injury) 2. in some cases (such as Medical Malpractice and Architects' and Engineers' policies) Bodily Injury is a covered cause of loss due to the nature of the profession

Fiduciary Liability Policy

1. another type of Professional Liability policy 2. protects those who manage private pensions and employee benefit plans against liability for violation of the federal ERISA law

Two Sources of Professional Liability Claims (Against Insurance Agents and Brokers)

1. any insurance company an agent represents 2. the agent's client

To Insure Full Coverage Against Liability Exposures Arising from Business

1. because malpractice insurance and E&O insurance cover loss arising from Professional acts or acts that fall within a Professional's duties, its' extremely important to distinguish between Profession and nonprofessional exposures (courts haven't always been consistent in their interpretations) 2. if insured wants full coverage against liability exposures arising from business, it may be advisable for the insured to maintain both a CGL policy and the appropriate Professional Liability policy

Errors and Omissions (E&O) Insurance

1. broad term that refers to Professional Liability policies written for other professionals (such as insurance agents, accountants, architects, stockbrokers, engineers, consultants, and attorneys)

Replacement or Restoration of Electronic Data

1. covers cost to replace or restore electronic data destroyed due to virus or malicious computer instructions designed to disrupt or destroy an insured's computer system

Cyber-Extortion

1. covers extortion expenses and ransom payments due to an extortion threat to inject insured's computer system with a virus or malicious computer info

Website Publishing Liability

1. covers insured's liability due to an unintentional error or misstatement posted on the insured's website 2.ex: include copyright infringement, defamation, or privacy violations

Network Security Liability

1. covers insured's liability of a person's unauthorized access to the insured's computer system, and this unauthorized access results in publication of clients' personal info 2. in addition, it covers insured's unintentional transmission of a computer virus to another party

Business Income and Extra Expense

1. covers loss of business income or extra expenses due to an interruption in insured's business due to a virus or malicious computer instruction or extortion threat

Exclusions (Difference from CGL)

1. professional liability excludes losses typically covered by CGL (slip and fall, etc.) (CGL coverage exclusions are those types of injury covered by professional liability (loss resulting from errors, omissions, poor judgement))

Who Is An Insured (Difference from CGL)

1. professional liability policies do not protect against injury done to one insured by another (some of these risks can be covered by employment practices liability)

Exposure To Loss (Difference from CGL)

1. professionally liability generally provides broader coverage because it covers financial losses arising from causes other than BI and PD (CGL is typically limited to third-party claims for BI, PD, and advertsing injury (damage to intangible property, such as software or data, is not covered because there is no injury or property damage))

Malpractice Insurance

1. term commonly applied to Medical Professional Liability policies written for medical professionals or institutions (including physicians, nurses, dentists, surgeons, opticians, optometrists, chiropractors, and veternarians

Directors' and Officers' Liability (or Management Liability)

1. this is a type of E&O policy 2. protect board members and top officers (typically not staff managers or volunteers) of for-profit companies from lawsuits brought by shareholders, customers, and competitors 3. managers of non=profit organizations are protected against lawsuits for failure to provide services or failure to manage assets 4. typically excluded from management liability coverage is liability related to company's benefit plans, dishonest, criminal, or fraudulent acts, and racketeering

Professionals Legal Duties To Their Clients

1. to perform the services for which they were hired 2. to perform them in accordance with appropriated standards of conduct (because of their special skills, professionals are held to higher standard of conduct)

Defense Costs (Difference from CGL)

1. under professional liability policies the expenses associated with the duty to defend reduce the policy limits (under CGL policies are paid in addition to payment for claims)

Perils Covered (Difference from CGL)

1. various types of professional liability policies are tailored to perils faced by a particular profession (CGL is designed to cover certain risks for many types of businesses)

Professional Liability Policies

Have been developed for many professionals, such as: 1. physicians 2. surgeons 3. dentists 4. lawyers 5. insurance agents 6. architects 7. accountants 8. directors and officers of corporations each policy is tailored to fit a specific occupational need written on a claims-made- and - reported basis (meaning claim must be made during policy period or ERP and reported during that same period of policy in force at the time) also available with same types of claims-made and occurrence coverage triggers as described for CGL coverage (although occurrence form is very rare for professional liability)