Professional Liability Tips and Tricks for Healthcare Staffing Firms
As the healthcare industry continues to evolve, healthcare staffing firms are often required to maintain more comprehensive insurance coverages by their clients, especially relating to professional liability. Here’s an overview of frequent requests and tips and tricks for your staffing company.
Endorsements, Endorsements, Endorsements!
The past few years there’s been an increase in requests for specific professional liability endorsements. Historically, the following have been in the realm of general liability, but are now becoming commonplace for professional liability as well.
- Additional insured endorsement
- Primary and non-contributory endorsement
It’s important to note that not all insurance carriers offer these endorsements. Endorsement requests to the carrier take on average a few days to several weeks to be issued. Some carriers will provide endorsement binders as interim documents for proof of coverage. Often, the client company will insist on the actual endorsement to comply with its insurance requirements, so this may delay the beginning of business operations with your client.
A solution can be to request endorsements on a “blanket” basis, thus enhancing your speed of doing business. This means the healthcare staffing firm would be allowed to designate any/all clients as additional insured or provide coverage on a primary and non-contributory basis, if they agree to do so in writing prior to any claims occurring. This helps eliminate the possibility of the insurance carrier declining to include an additional insured endorsement to one of your clients, which may inhibit you from doing business. It also eliminates the days, possibly weeks, of follow-up to the carrier for endorsement issuance.
Insured Versus Insured Exclusion
An additional insured endorsement in favor of the healthcare staffing firm’s client (hospital) would then essentially name the hospital as an “insured” on the policy. This could potentially create an issue in the event a claimant (injured patient) files a suit against the hospital and the hospital then files a suit against the staffing firm to recoup the damages.
However, most insurance policies don’t allow one insured on the policy to file suit against another insured. An example follows:
- Hospital is added as “additional insured” by staffing firm
- Staffing firm’s professional liability policy holds an “insured versus insured” exclusion
- Staffing firm places a nurse at the hospital
- Staffing company’s nurse is negligent in handling of a patient
- Patient retains an attorney and files a lawsuit against the hospital
- Due to the insured versus insured exclusion, if the hospital sues the staffing firm to recoup defense costs and damages paid to the claimant, the staffing firm wouldn’t be able to utilize their professional liability for defense costs or settlement since the hospital is named as an insured
- Staffing firm then doesn’t have coverage under their professional liability policy due to the exclusion
Although there’s a premium often associated with removing the “insured versus insured” exclusion, it’s imperative this exclusion is removed. It’s well worth the additional expense.
The Sky Is the “Limit”
The requirements for the limits of insurance on the professional liability continue to grow each year. Just a few years ago, the average norm was $1M per occurrence and $2M aggregate. More recently, hospitals and other clients of healthcare staffing firms have been requiring on average $2M and $4M limits, respectively (this is an average; note your company’s limits might vary). What can most often relieve the need to constantly purchase increased limits of insurance would be to maintain an umbrella liability policy which includes professional liability on the schedule of underlying coverages.
- Professional liability policy has $1M per occurrence and $3M per aggregate limits
- Umbrella policy has a $1M limit and includes professional liability on the underlying schedule
- Combined professional liability limit would then be increased to $2M per occurrence and $4M aggregate limits
As long as the umbrella policy is written to “follow form”, it’ll follow the coverage enhancements of the professional liability policy included within the underlying schedule. Thus, the staffing firm would be able to comply with all clients who require a $2M/$4M limit, even though their actual professional liability policy has a $1M/$3M limit.
These are just a few of the intricacies that can help a healthcare staffing firm in obtaining new business contracts. As the healthcare industry is rapidly moving to the model of employing their healthcare personnel through staffing firms, it’s essential your company have these items negotiated ahead of time with your insurance carrier, so you can move as quickly as your clients would prefer. For more information, contact a member of the ‘A’ Team.
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