Thread: Did you ever hear of this??

Hello all,

This post serves as a warning and a question.

My E&O, GL, and bonding lapsed Jan 6th while I was looking for a better deal on insurance for my hi business. I found out two days ago that my previous insurance company will not cover last year (that I paid $3000 for) because I allowed my coverage to laps. They said they will continue coverage if I sign another contract with them...

WOW to me this doesn't sound legal let alone ethical. I called around and it sounds like they have the power to do it so they are.

Anyone have any suggestions other then don't let your coverage laps.

Thank you all
mk

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Originally Posted by Mike Krueger

Hello all,

This post serves as a warning and a question.

My E&O, GL, and bonding lapsed Jan 6th while I was looking for a better deal on insurance for my hi business. I found out two days ago that my previous insurance company will not cover last year (that I paid $3000 for) because I allowed my coverage to laps. They said they will continue coverage if I sign another contract with them...

WOW to me this doesn't sound legal let alone ethical. I called around and it sounds like they have the power to do it so they are.

Anyone have any suggestions other then don't let your coverage laps.

Thank you all
mk

I miss understood it doesn't matter if your coverage laps your E & O will not cover any jobs you did in the past if you don't continue paying. So if you switch insurance companies for your E&O coverage you will have to pay for an extended reporting policy so your last two years are covered. Then your new policy with the new company would start today and cover the upcoming year...

I'm in the wrong business. It looks like insurance companies have quit the racket going and it's legal . Unreal!

Mike Kruger,

Just about any one holding professional liability coverage is (or should be) familiar with just what Extended Reporting Period (Tail) Coverage is, and know IF they have it available to them, and for what time period the coverage extends (AND if there are favorable conditions as to waiving the premium yet still extending the coverage; such as full disability, or retiring completely from the profession, as long as all premiums were paid to date at the time envoking tail coverage, and if tail coverage is automatically envoked and billed upon non-renewal or cancellation)

Not to be confused with "Claims Made" coverage,

or Prior Acts (Nose) Coverage, (not to be confused with Claims Made Coverage "Retroactive" dated claims).

If you're reliant on your renewal insurance policy or next insurer's Nose coverage alone you'll find you've "screwed the pooch" if you're ever cancelled or fail to pay your premiums on time, without having envoked a Tail Coverage endorsement (for additional premium). The "hole" or gap is one that might never be fully "covered" (to be defended and/or indemnified).

IMHO, as I've understood over the years, no professional liability policy is complete without Tail Coverage endorsements, you never know when you (or your estate) will suddenly find you are no longer in the business to purchase insurance or no longer remain "eligable" to be an "insurable" practicing/working professional (for example, lose license, become disabled, die, etc.).

You should know this about your policy, just as you should be familiar with all of its various exclusions.

I am curious for those in states which license, and mandate E&O, how many of you have administrative defense reimbursement coverage?

I am also curious if your HI type E & O policies allow "temporary suspensions" with no premium during the period should one be recalled to active duty in the armed forces. Perhaps not, as one usually doesn't function as an HI for the armed forces...unlike perhaps a PE, MD, etc. but was curious.

Don't mean to derail your thread/rant.

P.S. there are a LOT of topic discussions on Professional Liability insurance, exclusions, coverages/endorsements, etc. Many are in the Buisness Operations topic area, quite a few of them have "E" and "O" referenced in the topic titles.

There are also some fine articles referenced in another area of IN.

I am not up-to-date on WI Insurance rules, but somehow I suspect the impending date of January 6th was not unknown to you, nor the date which determined the finality of your former coverage period, or if on a premium payment plan, the date of the next payment due.

If your former insurer is offering you continuation without lapse or gaps at this point, grab it. If they're williing to write a tail endorsement do the same.

I wouldn't think of letting one stop without an actual replacement policy, not just a binder, in hand.

If you review some of the many topic discussions in the business operations area you will find some representatives of the major HI professional liability insurers have participated in discussions here, those that haven't, contact information is also available on a list that our host has prepared IIRC there is a sticky in that same area which contains a link to Brian's list.

HTH and good luck to you.

I think its pretty common policy that if you let your policy lapse, then the coverage stops. My retroactive date is dependent on my having a current policy for each year without letting it lapse.

Sorry to sound harsh Mike, but you are the only one to blame for letting it lapse.

The company I'm with gives a 10 day grace period so I'm still covered. I bound coverage today.

While talking with a different company today I found out that I can shop (bind coverage with another company) around as long as coverage has not been interrupted. The new company would assume liability for past inspections.

Thank you for your help

Mike Kruger,

You still should consider Tail Coverage endorsement, so you'll have that to fall back on for the "if" or "when" time comes.

Originally Posted by H.G. Watson, Sr.

Mike Kruger,

You still should consider Tail Coverage endorsement, so you'll have that to fall back on for the "if" or "when" time comes.

I will look into this Thank you!

Originally Posted by Jack Feldmann

I think its pretty common policy that if you let your policy lapse, then the coverage stops. My retroactive date is dependent on my having a current policy for each year without letting it lapse.

Sorry to sound harsh Mike, but you are the only one to blame for letting it lapse.

No problem - your right Jack. The only harm is I can't shop around yet but I'm still covered because of the 10 grace period...

Thank you

Good news about the 10 day grace period!!

Originally Posted by Jack Feldmann

Good news about the 10 day grace period!!

Yes it is!!

If you are in a licensed state and you are required to have E&O you need to be careful in letting your insurance lapse, you might find yourself with a fine and in violation of the license law. All of the states that require E&O have a requirement that the insurance company must notify them if the insurance is not renewed or lapses.

Originally Posted by Scott Patterson

If you are in a licensed state and you are required to have E&O you need to be careful in letting your insurance lapse, you might find yourself with a fine and in violation of the license law. All of the states that require E&O have a requirement that the insurance company must notify them if the insurance is not renewed or lapses.

WI is a licensed State but they don't require insurance. Some hi in the area don't carry ins. I would never go without it. Mine lapsed because I started shopping around too late. I didn't know about the retro thing either. I'm also planning on becoming a member of internachi. Some insurance companies will give you a discount for being a member. I did realize it would take me so long to get a membership. I figured you just send them a check and your in. I found out you need to pass some tests before becoming a member so I was brushing up a bit and just ran out of time. I had a 10 day grace period but was still shocked to find out if I went over the 10 days the year I paid for would not be covered. I realize why they do it but it still doesn't seem ethical.

Thank you
mk