Written by Sarah Lim, CA Lic# 0M52397

HELP YOUR BROKER HELP YOU

If you aren’t too familiar with professional liability insurance, you probably think that a broker and an agent are the same thing but you couldn’t be more wrong.  Do you know that a “broker” works for the insured?  He works for you!  Did you know a “broker” has the insured’s best interest in mind?  He wants what’s best for you! 

The process of finding medical malpractice coverage is not a quick one.  There’s a process that needs to be followed that includes completing an application & gathering various documents together for submission.  These documents include loss runs, broker of record, claims supplements, curriculum vitae, licenses, certificates, etc.  Depending on who you’re submitting it to (an agency or directly to the carrier), your application and supporting documents get underwritten by each carrier to determine your qualification for coverage.  Most of the time this can take anywhere from 2 weeks to one month or longer.  However, it seems like many doctors seeking medical malpractice insurance are under the assumption that seeking professional liability insurance is like purchasing auto insurance – just answer some questions and pay for the quote generated.  This is one of the most dangerous assumptions so beware!!

I recently had several doctors who thought this way and called me weeks to months after the cancellation of coverage from their now previous carrier.  By the way, I’ve heard different stories from each of them for why it was cancelled but after a little digging, it always boiled down to cancellation due to nonpayment.  So another tip is to always be honest with your broker.  Waiting too long not only creates a huge exposure to risk but also can create a delay in the search process as well as make a significant, and many times unaffordable, dent in your wallet.  You will need to see which carriers will offer terms that include retroactive coverage as well as the possibility that they will backdate to the date of cancellation.  If they cannot offer retroactive coverage, then the offered terms will be Retro Date Inception (RDI), which means your retroactive date will be the effective date of the new policy.  In other words, there is no retroactive coverage included.  Backdating is extremely difficult, if not impossible, depending on the length of time you allow to pass after your previous policy was cancelled.  Most carriers may be open to backdating up to a period of 1-2 weeks, but never rely on taking that chance.  Once you see which carriers are open to insuring you, you will have the best odds of seeking tail coverage options through them.  This will be important because if your policy was cancelled due to nonpayment, the carrier for that policy will most likely not offer tail coverage so you will have to seek it elsewhere.  Keep in mind, there can be other reasons for carriers to decline offering tail coverage. 

The more your broker has to dig, verify, and confirm on your behalf, the longer it will take for him/her to find every option available to you.  For these clients, it was 2-3 months before the correct coverage was placed and their tail cost them tens of thousands of dollars.  For most of them, backdating was not possible so they now have a gap in coverage.  For some, tail was too expensive so they declined to purchase it but now they are putting their future at risk because they are on the hook for everything if or when a claim comes in.   

If you find yourself in this kind of situation, call us immediately!  The sooner you call us, the better we will be at finding you the right coverage at best price!