Professional Liability Insurance. Professional liability insurance coverage is needed for protection against:. Professional liability claims (e.g., malpractice) Injuries to patients that occur on the office premises Monetary loss due to theft, burglary, fraud and similar crimes
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Note: policies do not cover intentional offenses like fraud, HIPAA violations, sexual harassment, or fines for failure to comply with state and federal law.
Example: a patient is injured in an accident on the premises and is permanently, totally disabled. The OD has a $1/$3 million policy, but has to pay a judgment of $2 million. The standard policy will pay $1 million, but if there was a $2 million umbrella, the whole judgment would be paid.
Note: judgments for blindness caused by negligence have been as high as $13 million
Fire insurance should be obtained for personal property; so also should coverage for loss of personalty from other perils (e.g., wind, flood, lightning). “Replacement value” or “extended replacement value” is the preferred type of coverage. This ensures that the actual cost of replacing the equipment will be paid.When a loss due to fire or other perils is indemnified (reimbursed) by the insurer, this income is not taxable.
Example: an $800,000 building is insured for $600,000, and fire causes a $600,000 loss. Full coverage would be $640,000 (80% of $800,000), so the building is 93% insured (600 K ÷ 640 K). The insurance will only cover 93% of the loss (600 K x 93%=$558 K), so the owner must pay $42,000.
Worker’s Compensation laws were enacted to provide benefits for employees injured in on-the-job accidents or by occupational diseases, and to limit the liability of employers for legal claims based on these accidents or diseases.
Employees are guaranteed a “benefit certain” for their injuries or illness, which is paid for by insurance purchased by the employer. In return, the employer is protected by the “exclusive remedy” provisions of the law, which means that the employee cannot sue for damages.
All states have worker’s compensation statutes.These state laws determine whether an employer must participate in worker’s compensation. In Alabama, an employer with more than 4 employees—full time or part time—must have worker’s compensation insurance coverage.
Employers with less than the requisite number of employees may elect to participate in worker’s compensation, usually by applying to the state’s worker’s compensation agency. This typically requires filling out a form. The employer may later withdraw from the plan if the employer chooses to do so.
Professional liability insurance policies do not usually include compensation for on-the-job injuries suffered by employees, so it is important to add coverage from a commercial carrier if not electing to apply for coverage under the worker’s compensation law. This coverage will increase the cost of the insurance policy, but will be less expensive than the payments to a worker’s compensation plan.
The benefits that may be claimed by injured or ill workers under worker’s compensation are limited by law. In Alabama, for permanent partial disability, payment under worker’s compensation is limited to 66 2/3 % of the average weekly earnings received at the time of injury.However, there is a ceiling on the amount that can be paid, which is $220 per week.
Payment for permanent partial disability is also limited in the duration of compensation paid. In Alabama, payment for the loss of an index finger is limited to 31 weeks; for the loss of a hand is 170 weeks; for the loss of an arm is 222 weeks; for the loss of an eye is 124 weeks. Thus, under worker’s compensation, the maximum amount that a worker can receive for loss of an eye is $27,280 ($220 x 124), as opposed to court judgments in excess of $1 million.Worker’s compensation benefits paid to an employee affect the insurance premiums that must be paid by the employer (they go up!).