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COVID-19 and Your Professional Liability Insurance Coverage

Conducting business has never been more fraught with questions, concerns, and ever-changing rules. As a professional, and perhaps an owner, you’re probably seeking clarification and advice on how to conduct business amidst this new normal.

We may not have all the answers, but our professional liability experts, in coordination with our carrier partners, have gathered a list of frequently asked questions that may help alleviate some of your concerns. We’ve also noted a few things to watch out for and how to limit your risk during these challenging times.*

Does my professional liability policy cover a claim if a client sues me for supposed exposure to COVID-19?

The answer is “maybe.” The claim would still need to be defended regardless of how difficult contact tracing to a specific individual would be. This would be considered a bodily injury claim. Bodily injury is typically covered under a firm’s general liability policy, but some professional liability policies allow you to add some contingent bodily injury coverage.

However, such an endorsement would need to meet underwriting guidelines and may be contingent upon a firm having a general liability policy in-force. The bodily injury claim would be reported to the general liability carrier first. If the carrier denies the claim, the endorsement would allow consideration for covering the claim.

Typically, these endorsements would need to be added during a firm’s renewal process. Most cannot be added mid-term.

With the decline in business activity, do I have any coverage for lost revenue due to business interruption?

Business interruption is not covered under your professional liability insurance. If your firm has a business owners policy (BOP) in place, you may have coverage under that plan. Read more about general business coverage and COVID-19.

My state has issued a shelter-in-place mandate. Does my professional liability policy cover a possible claim if I violate the order?

Most professional liability policies include exclusionary language indicating it does not cover claims resulting from criminal or intentional acts, including fines and penalties. If a claim was submitted, along with multiple other allegations, it would most likely be reviewed on a case-by-case basis.

How can I reduce my professional liability insurance premiums during this challenging time?

There are several ways you can manage your premium, including: making sure you are getting all available benefits, practicing effective risk management techniques, staying current with your professional education and designations, and managing claims. You may also wish to consider a higher deductible to reduce premiums during these tough times.

Keep in mind that professional liability policies are largely written on claims-made forms, which means that lapses or cancellations of coverage will result in a loss of coverage for all your past transactions. You must maintain continuous coverage to preserve your prior acts coverage.

This is not the time to cancel your professional liability insurance or switch to inferior coverage to save money. By forgoing essential coverage, you may end up spending more money on claims that are not covered by stripped-down policies.

Are there additional risks for business professionals I should be aware of or watch out for?

Due to the number of business professionals who are now working from home rather than in an office, we are seeing an increased risk of cybercrime. The national work-from-home mandates are a breeding ground for fraudsters.

We recommend adhering to strict online security guidelines and focus on how to identify phishing red flags. A cyber liability policy is now more important than ever, whether added to your professional liability policy, if that is an option, or purchased as standalone coverage (or both).

These are challenging times, but with expert guidance and prudent business management, we can all weather the storm.

If you have other questions, please contact one of our insurance representatives at 800.447.4982. You can also visit pearlinsurance.com for more information.

*Please consult with your insurance agent or carrier to verify coverage in all instances. The information presented here reflects policies and procedures recommended at this point in time. Due to the developing nature of the COVID-19 situation, some information may change.

Lisa Scoble is Pearl’s Vice President of Programs managing our Real Estate Errors and Omissions Program. She holds her Certified Insurance Counselor (CIC) and Certified Risk Manager (CRM) designations from the National Alliance, is a member of the Professional Liability Underwriting Society (PLUS), and holds a real estate license in Michigan. For questions regarding this blog post or other professional liability insurance matters, she can be reached via phone at 309.679.0508 or email at lisa.scoble@pearlinsurance.com.