Admitted Market

An admitted carrier or standard carrier is an insurance company that has received a license from the state department of insurance giving the company the authority to write specific lines of insurance. These companies are also bound by rate and form regulations, and are strictly regulated to protect policyholders from a variety of illegal and unethical practices, including fraud.

Admitted carriers are also required to financially contribute to the state guarantee fund, which is used to pay for losses if an insurance carrier becomes insolvent or unable to pay the losses due their policyholders.

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Claims Made versus Occurrence Policy Form

Professional liability insurance may be purchased either on a claims made or occurrence coverage form. As a general rule, the occurrence form offers superior protection, but it can be significantly more expensive than the claims made form.

The occurrence form protects against covered lawsuits as long as the policy is in force when the bodily injury or property damage occurs. As long as this condition is met, coverage is not jeopardized even if the policy is cancelled or non-renewed and the claim or lawsuit is subsequently filed at a later date.

The claims made form protects against covered lawsuits only when the following two conditions are met:

  1. the policy is in force when the bodily injury or property damage occurs (just like the occurrence form), AND
  2. the policy or a renewal of the policy is still in force when the claim is made.

The second condition makes the claims made form more risky than the occurrence form, since the claims made policy may not be renewed if the insured neglects to pay the premium, shuts down operations or if the carrier does not offer a renewal.

In effect, the occurrence policy provides coverage during its coverage period in perpetuity — even after the policy has expired. While the claims made policy discontinues coverage after the policy has expired. Which can be an issue in “long tail” claims such as asbestosis where the injury may not manifest itself till many years later.

Policyholders that have the claims made form that shut down their operations may elect to buy “tail” coverage, which in effect converts their claims made policy into an occurrence policy.

Changing a claims made policy from one carrier to a new carrier upon renewal may be a bit tricky because of a provision in the policy known as a “retroactive date.” It is of critical importance that the retroactive date is always set to be the first date that the first claims made policy was effective.

Even though occurrence coverage is superior for the reasons stated above, many start up operations opt for claims made coverage due to its more affordable premium.

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Contractual Liability

Contractual liability does not arise by way of negligence, but by entering into a written contract or agreement. It is common in business agreements for one party to assume the liability of another. This is sometimes referred to as a hold harmless agreement. The full extent to which one holds another harmless varies from project to project, contract to contract, and job to job. To assume liability of another is risky and increases your exposure to loss. That is why insurance is required. Contractual liability insurance is usually provided through a general liability insurance policy.

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Crime Coverage

Covers Employee Theft and Forgery or Alternation. Employee Theft protects you from embezzlement by your own employees. Covers theft of money, securities and other property. Forgery or Alteration coverage is designed to protect you from an employee forging or altering checks or drafts, including payroll checks.

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Electronic Data Processing (EDP)

Provides all-risk coverage for computer hardware and software programs. Protects your equipment from a wide range of exposures such as mechanical breakdown, fire, theft, vandalism, smoke damage, changes in temperature and power fluctuations — but excludes such things as wear and tear and inherent vice.

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Employee Benefits Liability

Protects the employer against claims by employees or former employees resulting from negligent acts or omissions in the administration of the insured's employee benefits program.

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Fire Legal Liability

Coverage for property loss liability as the result of negligent acts and/or omissions of the insured that allows a spreading fire to damage others' property.

For example, if you are a tenant renting your office space and cause serious fire damage to the property — the owner of the building and their insurance carrier will seek reimbursement. Fire Legal Liability protects you from such suits. Another example, would be if you allowed a fire to spread to a neighbor's property.

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General Liability

Liability insurance protects the assets of a business when it is sued for something it did (or didn't do) to cause an injury or property damage.

Under a general liability insurance policy, the insurer is obligated to pay the legal costs of a business in a covered liability claim or lawsuit. Covered liability claims include bodily injury, property damage, personal injury, and advertising injury (damage from slander or false advertising). The insurance company also covers compensatory and general damages. Punitive damages aren't covered under general liability insurance policies because they're considered to be punishment for intentional acts.

General liability insurance policies always state a maximum amount that the insurer will pay during the policy period. Usually these policies also list the maximum amount the insurer will pay per occurrence. For example, if a company has a $1 million occurrence cap on its liability policy and it's successfully sued for $1.5 million, the insurer would pay $1 million and the business would be responsible for paying $500,000.

To cover these types of situations, many companies purchase umbrella liability insurance, which picks up where their general liability coverage ends. Umbrella liability covers payments that exceed their primary policy’s limits, and provides additional coverage for liabilities not covered in a standard liability insurance policy.

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Hired & Non-Owned Auto Liability

Provides liability coverage to protect your organization from loss arising out of the use of a non-owned vehicle being operated by an employee of your organization while conducting official business. Coverage is excess over any valid and collectible insurance.

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Non-Admitted Market

A non-admitted carrier is not licensed by the state, but is allowed to do business in that state. Sometimes, non-admitted carriers are referred to as unlicensed carriers; however, non-admitted carriers are financially stable companies that are regulated in a round-about way.

Most states require that non-admitted carriers submit financial information, articles of incorporation, list of officers, and other general details. They also cannot write insurance that is typically available in the admitted market, they are not protected by the state guarantee fund, may pay higher taxes, may only write a policy if it has been rejected by three different admitted carriers, and the agent placing the business must have a surplus lines license. States also maintain a list of approved surplus lines companies, and policies can only be written by companies on this approved list.

Non-admitted carriers are not bound by most of the rate and form regulations imposed on standard market companies, allowing them the flexibility to change the coverage offered and the rate charged without time constraints and financial costs associated with the filing process. This is good for both the company and the policyholder.

Non-admitted carriers are sometimes referred to as “excess and surplus lines” insurers.

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Occurrence and Aggregate Limits

Most liability policies quote their coverage in two limits: the occurrence limit and the aggregate limit. For example, if you had a policy with $1,000,000/$5,000,000 limits, this means the maximum dollar amount of coverage in force is $1,000,000 per individual claim, and $5,000,000 during the annual policy period.

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Professional Liability

Sometimes referred to as “malpractice insurance” or “errors and omissions.”

Protects you and your company in the event a patient/client alleges they have suffered a financial loss as a result of rendering or failure to render professional services in connection with your business.

Professional liability coverage is separate from a General Liability (GL) policy which covers you primarily for claims involving bodily injury or property damage.

Professional liability policies are typically issued in increments of $1,000,000 in coverage. A number of insurance companies offer specialized professional liability policies developed for specific professions. It is worth your while to work with an agent or broker that has access to numerous insurance carriers so you can have some confidence that they can obtain the broadest possible coverage for you at a competitive rate.

Every professional liability insurance policy may contain different exclusions. It is important for you to analyze your current plan and make sure you do not have any critical gaps in coverage. Discuss your concerns with the Affinity Healthcare account specialists. They can help identify the right professional liability policy that fits your needs.

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Sexual Abuse & Molestation Coverage

Most general liability policies include an “intentional acts exclusion” that disallows coverage for claims alleging sexual abuse. If your patients/clients include minors, the elderly or the disabled then Sexual Abuse & Molestation coverage can be extremely important.

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