Can the changes you make to your coverage affect risks from your previous policy?
If you have to make some tough choices to control your renewal costs, such as lowering your limit of liability, eliminating attractive options like ‘first-dollar defense costs coverage,’ or increasing your deductible, discuss these with your agent and compare your policy form before making a change. Your firm will be subject to the financial risk of these changes today when the claim is made, even though the claim may stem from an alleged mistake you made when you had a policy that offered you financially friendlier terms.
The choice you make now will impact risks from your past. For the same reason, be aware of the limitations on your new policy that affect previous exposures.
What types of terms and conditions should you look for in a new policy?
Don’t be afraid to ask what you are buying. What you pay out of your pocket can be more than your limit, deductible and premium. That’s startling. Some policies pay you for your attendance at claim proceedings or cut your deductible in half if you participate in mediation or have fewer exclusions; take advantage of these savings.
Ask your broker to provide you with a comparison between the different policies. If this does not occur, you should consider a switch to a new representative. Create your own checklist from the features of the policies you are being sold. At a minimum your list should include retroactive date; deductible options and their cost; persons/entities covered; management and financial ratings of the company; definition of professional service; differences in exclusions; and coverage territory.
You’ll also want built-in features that reduce the deductible, such as payment for attendance at claim proceedings and risk management support services, like continuing education, contract review and seminars.
How can you get informed about insurance issues?
There are plenty of sources to help you gather and process information. Professional societies poll their members on insurance issues and some interview underwriters and other representatives from the professional liability insurance markets.
Ask your colleagues. Check the Internet. And, most importantly, remember that a portion of your premium is paid to your insurance agent/broker and you should expect service. Ask them to perform.
Karen Miller is president of Royal Marine Insurance Group (RMIG). Reach her at (305) 477-3756 or [email protected].