Professional liability insurance

A professional liability policy is a written agreement between the professional and the insurance company. Many types of professionals may seek liability insurance, including attorneys, architects, accountants, and health care providers, such as nurses, physicians, and dentists, to name a few. Under the terms of a professional liability agreement the insurance company agrees to compensate a person for injuries caused by the insured professional. Injuries may be caused by an act or omission by the insured.

Professional liability policies are increasingly being written to include additional coverage for disciplinary actions against the insured professional. Usually, such policies provide reimbursement for legal fees incurred by an insured that faces disciplinary action by the licensure board.

A professional liability insurance policy may be either an occurrence based policy or a claims-made policy. An occurrence based policy covers injuries that occur while the policy is in effect, a time referred to as the policy period. A claims-made policy covers only those injuries that (1) occur during the policy period and (2) are reported to the insurance company during the policy period or during the uninterrupted extension of that policy period, known as a tail.

Once a claims-made policy is no longer in force, without a tail, nurse remains exposed to liabilities for injuries that were caused, but not reported, during the policy period. The tail can provide continuous protection during whatever future time period a viable claim may be filed The length of that period depends on the applicable statute of limitations in the jurisdiction where the plaintiff files the claim. In subspecialties involving the care of children, nurses may need occurrence-based coverage or a very long tail for a claims-made policy. Many states suspend the statute of limitations for minors until the age of majority, permitting minors, once they reach majority, to sue during the period defined by the statute of limitations.

Some school districts may elect to self-insure rather than cover risk through a commercial insurance program. School nurses evaluating their own risk based upon coverage available through a self-employed employer should review the terms of that self-insurance program much the same way they would review a commercial policy. Issues to explore include the scope of the program, the limits available, the point at which the program provides coverage, the reporting obligations, the nature of any exclusion, and details related to legal counsel available through the plan. School nurses should assess the solvency of the self-insurance program, just as they would assess the security and solvency of a commercial insurance company before purchasing insurance from that company. Self-insurance programs should have adequate funds segregated from general assets to cover anticipated losses. The self-insurance program should also have in place written claims-processing guidelines and procedures.

Selection of counsel is an issue of particular importance to self-insurance programs. Some self-insured districts may hire outside attorneys to handle lawsuits;others may use district or school board attorneys for all lawsuits or those under a certain dollar amount. Because education attorneys often are not familiar with the legal issues raised in a medical malpractice action against a school nurse, they may not be in a position to provide the best defense. School nurses employed by a self-insured district that uses its own education attorneys to handle all the lawsuits may wish to explore with the district the possibility of involving an experienced medical malpractice attorney when facing a lawsuit that includes allegations of professional negligence. If the district refuses, the school nurse should evaluate the representation available and consider a consolidation with a medical malpractice attorney, at her or his own expense if feasible or necessary.

If a school district self-insures only the risks associated with its educational activities, prior to accepting a position with that district the school nurse should explore obtaining an individual professional liability policy at the district's expense. If the school district is reluctant to cover the cost of such a policy because it believes the school nurse is adequately protected by some type of sovereign immunity available, rather than rely on the district's opinion, the school nurse should seek legal advice and reach an independent conclusion on that issue.

A nurse considering the question of professional liability coverage should also evaluate the scope of the coverage. Depending on the policy form chosen, the policy may define the insurance company's obligation differently and perhaps offer coverage more limited than appropriate for a particular professional. One form limits the company's obligation to damages for injuries to a patient or client caused by a medical incident, while another more broadly applies that obligation to damages for injuries arising out of the rendering or failure to render professional services.

All professional liability policies include what are known as exclusions. While some exclusion is specific, such as claims arising out of sexual abuse or criminal activity, others exist as a result of the type of policy issued and should be evaluated carefully.