Business Workshop

Malpractice insurance for professionals

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Most professional service businesses need errors and omissions (E&O) insurance, also known as professional negligence or malpractice insurance.

Without E&O insurance, an attorney, accountant, doctor or other professional might find that a math error, surgical error or missed deadline could have major consequences.

But like any insurance, E&O has complications that can trip up a professional service firm. If the business does not understand its rights and obligations as spelled out in the insurance contract, it can end up having a claim denied.

Here are some of the more common mistakes firms make related to E&O insurance:

• Not understanding the real date that claims are covered. Some policies contain "retroactive dates," which exclude coverage for claims prior to a specified date, even if the claim is made during the policy period.

• Waiting to report a claim.

• Assuming a situation isn't covered under the policy.

• Not reporting a claim because the accuser is lying. Even if a claim is baseless, it still should be reported to the insurer.

• Letting coverage lapse, even for one day. If a business fails to renew its coverage, it may lose coverage for the period prior to the new retroactive date. Even if a professional has had coverage for ten years in a row, if the firm misses the renewal date in 2013, it may still be denied claims for all acts committed before 2013.

While the job of the claims adjuster is to determine whether a claim falls within coverage, keep in mind that it's in the best financial interest of the insurance company to deny a claim.

-- Beth Slagle
Meyer, Unkovic & Scott
bas@mnusalw.com


Business workshop is a weekly feature from local experts offering tidbits on matters affecting business. To contribute, contact Business Editor Brian Hyslop at bhyslop@post-gazette.com.

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