Summary: This article describes professional liability coverage for physicians, surgeons, and dentists. The ISO Physicians, Surgeons and Dentists Professional Liability coverage form (PR 00 01 09 08) affords protection against claims for injuries arising out of the insured's acts or omissions of a professional nature. Policies may be written to cover individual liability, partnerships, and professional associations and corporations.
Subject to conditions, definitions and exclusions which define the scope of coverage, the policy provides coverage A—individual professional liability and coverage B—partnership, limited liability company, association or corporation professional liability. Coverage A provides coverage for damages by a “medical incident” (a defined term) arising out of the practice of the insured's profession as a physician, surgeon or dentist. Coverage B provides coverage for damages by a “business entity incident” by a person for whose acts or omissions the partnership or association insured is legally responsible.
Topics covered:
Insuring agreements—Coverages A and B
Exclusions
Persons insured
Limits of insurance
Conditions
Definitions
Claims-made coverage
Other liability exposures
Insuring Agreements—Coverages A and B
1.Coverage A—Insuring Agreement—Individual Professional Liability
a.We will pay those sums that the insured becomes legally obligated to pay as damages because of injury to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for injury to which this insurance does not apply. We may at our discretion investigate any “medical incident” and settle any claim or “suit” that may result. But:
(1)The amount we will pay for damages is limited as described in Section III—Limits Of Insurance; and
(2)Our right and duty to defend end when we have used up the applicable limit of insurance in the payment of judgments or settlements.
No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments.
b.This insurance applies to injury only if:
(1)The injury is caused by a “medical incident” that takes place in the “coverage territory”;
(2)The injury occurs during the policy period; and
(3)The injury arises out of the individual insured's profession as a physician, surgeon, or dentist; and
(4)Prior to the policy period, no insured listed under Paragraph 1. of Section II – Who Is An Insured and no “employee” authorized by you to give or receive notice of a medical incident” or claim, knew that the injury occurred, then any continuation, change or resumption of such injury during or after the policy period will be deemed to have been known prior to the policy period.
c.Injury which occurs during the policy period and was not, prior to the policy period, known to have occurred by any insured listed under Paragraph 1. of Section II – Who Is An Insured or any “employee” authorized by you to give or receive notice of a “medical incident” or claim, includes any continuation, change or resumption of that injury after the end of the policy period.
d.Injury will be deemed to have been known to have occurred at the earliest time when any insured listed under Paragraph 1. of Section II — Who Is An Insured or any “employee” authorized by you to give or receive notice, of a “medical incident” or claim:
(1)Reports all, or any part, of the injury to us or any other insurer;
(2)Receives a written or verbal demand or claim for damages because of the injury; or
(3)Becomes aware by any other means that injury has occurred or has begun to occur.
2.Coverage B—Insuring Agreement Partnership, Limited Liability Company, Association, or Corporation Professional Liability
a.We will pay those sums that the insured becomes legally obligated to pay as damages because of injury to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for injury to which this insurance does not apply. We may at our discretion investigate any “business entity incident” and settle any claim or “suit” that may result. But:
(1)The amount we will pay for damages is limited as described in Section III—Limits Of Insurance; and
(2)Our right and duty to defend end when we have used up the applicable limit of insurance in the payment of judgments or settlements.
No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments.
b.This insurance applies to injury only if:
(1)The injury is caused by a “business entity incident” that takes place in the “coverage territory”;
(2)The injury occurs during the policy period; and
(3)The injury is caused by any person for whose acts or omissions the professional partnership, limited liability company, association, or corporation, named in the Declarations, is legally responsible.
(4)Prior to the policy period, no insured listed under Paragraph 2. of Section II — Who Is An Insured and no “employee” authorized by you to give or receive notice of a “business entity incident” or claim, knew that the injury had occurred, in whole or in part. If such a listed insured or authorized “employee” knew, prior to the policy period, that the injury occurred, then any continuation, change or resumption of such injury during or after the policy period will be deemed to have been prior to the policy period.
c.Injury which occurs during the policy period and was not, prior to the policy period, known to have occurred by any insured listed under Paragraph 1. of Section II – Who Is An Insured or any “employee” authorized by you to give or receive notice of a “business entity incident” or claim, includes any continuation, change or resumption of that injury after the end of the policy period.
d.Injury will be deemed to have been known to have occurred at the earliest time when any insured listed under Paragraph 1. of Section II — Who Is An Insured or any “employee” authorized by you to give or receive notice, of a “business entity incident” or claim:
(1)Reports all, or any part, of the injury to us or any other insurer;
(2)Receives a written or verbal demand or claim for damages because of the injury; or
(3)Becomes aware by any other means that injury has occurred or has begun to occur.
Analysis
The ISO physicians liability forms contain two insuring agreements, one for coverage A—individual professional liability, and one for coverage B—partnership, limited liability company, association, or corporation professional liability. It is essential to understand the different applications of these coverages when arranging coverage for a physician, surgeon, or dentist.
Coverage A insures the individual liability of each person named in the declarations as an insured. Hence, persons insured under coverage A may be a physician in practice alone or any number of physicians belonging to a partnership, association, or corporation. If an insured under coverage A is a partner or member of a medical partnership or association, he will not be insured under coverage A for his legal responsibility for fellow partners' malpractice. Likewise, if the individual is a shareholder of a professional corporation, the corporation will have no insurance under coverage A for malpractice of the individual. For either exposure, coverage B is required.
Coverage B applies to group liability. And, it is based on “business entity incidents” as opposed to the “medical incident” which governs coverage under part A of the insuring agreement. Both “business entity incident” and “medical incident” are defined terms and are discussed later in this article.
The insuring agreements on PR 00 01 give the insurer the right to settle any claim or suit against the insured without the consent of the insured.
PR 00 01 has some of the same exclusions as does PR 00 03 09 08, the hospital professional liability coverage form; for example, the workers comp exclusion, criminal acts exclusion, and the contractual liability exclusion. For information on those exclusions, see Hospital Professional Liability Insurance. This discussion centers on two exclusions that appear on PR 00 01 and do not appear on PR 00 03.
This insurance does not apply to:
c.Rendering Of Or Failure To Render Professional Services By Others
Injury arising out of the rendering of or failure to render professional services by any other person for whose acts or omissions the insured may be held liable as a member, partner, officer, director or stockholder of any professional partnership, limited liability company, association or corporation.
This exclusion does not apply to Coverage B—Partnership, Limited Liability Company, Association, Or Corporation Professional Liability.
d.Liability Arising Out of Hospitals Or Other Enterprises
Injury for which the insured may be held liable as a proprietor, hospital administrator, officer, stockholder or member of the board of directors, trustees or governors of any hospital, sanitarium, clinic with bed and board facilities, nursing home, laboratory or other enterprises not named in the Declarations.
Analysis
Exclusion c. is merely a reinforcement for the idea that group liability coverage (partnerships, associations, or corporations) under PR 00 01 is provided by coverage B. For individual liability coverage, the insured should rely on coverage A. The insurer is using this exclusion to make a clear distinction between coverages A and B.
Exclusion d. deals with an insured who has a business connection with a hospital. If the insured has such a connection with a hospital or clinic, he should be protected by concurrent hospital liability insurance, preferably with the same insurer. If he is also engaged in a commercial business—such as the sale of medicine or appliances—he needs separate coverage such as a general liability policy. This exclusion makes the point that PR 00 01 is to apply to injuries arising out of the providing of or the failure to provide professional medical or dental services by the insured, and not for injuries that may arise due to the insured's nonmedical activities.
Note that there is no exclusion of injury arising out of the ownership or use of any motor vehicle. Hence, the policy covers liability from emergency treatment given in an automobile—or from the failure to provide treatment. To avoid any argument about coverage, it is advisable to have automobile liability insurance and physicians liability insurance written by the same insurer if possible, especially if the insured uses an automobile to make professional calls.
1.For Coverage A, if you are an individual, you are an insured.
2.For Coverage B, if you are:
a.A partnership, you are an insured. Your partners are also insureds, but only with respect to the acts or omissions of others in the providing of professional services for which they are held liable as a partner.
b.A limited liability company, you are an insured. Your members and managers are also insureds, but only with respect to the acts or omissions of others in the providing of professional services for which they are held liable as members or managers.
c.An association or corporation, you are an insured. Your “executive officers”, directors, trustees, governors and stockholders are insureds, but only with respect to the acts or omissions of others in the providing of professional services for which they are held liable as “executive officers”, directors, trustees, governors, and stockholders.
3.f an insured dies or is adjudged incompetent, this insurance will terminate for that insured. But the insured's legal representative will be an insured for any “medical incident” or “business entity incident” previously committed and covered by this policy.
No person is an insured with respect to the conduct of any current or past partnership or limited liability company that is not shown as a Named Insured in the Declarations.
Analysis
This section of PR 00 01 makes it clear that an individual practitioner needs coverage A to insure his own malpractice; and, if a member of a professional partnership or other group, needs coverage B to cover his imputed liability arising from the group's acts or omissions. And, of course, the partnership, limited liability company, association, or corporation needs coverage B to insure its liability for partners', members', or officers' malpractice.
Note that the physicians liability form only covers the insured's liability for the acts of the employee or other person, and this part of PR 00 01 does not make an employee an insured. PR 00 01 does not cover the employee for his own liability.
1.The Limits Of Insurance shown in the Declarations and the rules below fix the most we will pay regardless of the number of:
aInsureds;
b.Claims made or “suits” brought; or
c.Persons or organizations making claims or bringing “suits”.
2.The Individual Professional Liability Aggregate Limit is the most we will pay for the sum of all damages under Coverage A, subject to Paragraph 6. below.
3.The Partnership, Limited Liability Company, Association, or Corporation Professional Liability Aggregate Limit is the most we will pay for the sum of all damages under Coverage B.
4.Subject to Paragraph 2. above, the Each Medical Incident Limit is the most we will pay for all damages under Coverage A because of all injury arising out of any one “medical incident”.
All related “medical incidents” arising out of the:
a.Providing of or failure to provide professional medical or dental services to any one person; or
b.Serving as a member of a formal accreditation, standards review or equivalent professional board or committee in connection with a single person or organization
shall be considered one “medical incident”.
5.Subject to Paragraph 3. above, the Each Business Entity Incident Limit is the most we will pay for all damages under Coverage B because of all injury arising out of any one “business entity incident”.
All related “business entity incidents” arising out of the providing of or failure to provide professional medical or dental services to any one person shall be considered one “business entity incident”.
6.Under Coverage A, the Aggregate Limit and the Each Medical Incident Limit apply separately to each Named Insured.
The limits of this Coverage Part apply separately to each consecutive annual period and to any remaining period of less than twelve months, starting with the beginning of the policy period shown in the Declarations, unless the policy period is extended after issuance for an additional period of less than twelve months. In that case, the additional period will be deemed part of the last preceding period for purposes of determining the Limits of Insurance.
Analysis
This section of PR 00 01 establishes the most that the insurer will pay for both coverage A and coverage B; the limits are those shown on the declarations page. Paragraph 6 of this section notes that each named insured is entitled to the aggregate limit and the each medical incident limit. This means that, for example, if three doctors are named insureds for coverage A under PR 00 01, each one has the total aggregate limit and the total each medical incident limit available to him or her should a claim be made against him or her; if only one doctor is sued for injuries caused to a claimant, that doctor does not have to worry that he or she has only a third of the total declared limits available for payment. Of course, this does not mean the total amount paid out by the insurer will exceed the limits as stated on the declarations page. For example, if two of the three named insured doctors are sued and found liable for the injuries claimed, the total paid out by the insurer will not exceed the stated limits, the total paid out will not be two times the stated limits.
PR 00 01 has the standard conditions, such as bankruptcy and duties in the event of a claim and separations of insureds, as are found on the CGL form; see General Provisions of the CGL. However, there is a distinct condition on PR 00 01 that merits an analysis.
10.When Your Business Or Profession Changes
The first Named Insured must notify us of any change which might affect the terms of this insurance, including a change in:
a. Members, partners, officers, directors, stockholders or medical professional “employees”; or
b. Medical specialty.
Analysis
This condition that is particular to PR 00 01 makes the point that the insurer does not want to insure an unknown exposure. The professional liability policy is written by the insurer after the exposures are known and the premium set accordingly. If there is a change, for example a new doctor is hired with little experience or if a named insured doctor takes on a new specialty, the exposure to claims and medical incidents rises. The insurer is entitled to be made aware of this new, increased risk of loss.
There are two definitions on PR 00 01 that stand out and merit discussion. The other seven—bodily injury, coverage territory, employee, executive officer, leased worker, suit, and temporary worker—are standard and can be found on the CGL form; see Commercial General Liability Definitions.
2.”Business entity incident” means any act or omission arising out of the providing of or failure to provide professional medical or dental services by:
a.Any of your partners (if you are a partnership), members or managers (if you are a limited liability company), or directors, “executive officers”, governors, trustees or stockholders (if you are an association or corporation):
b.Your “employee”; or
c.Any person acting under the personal direction, control or supervision of:
(1)A partner (if you are a partnership);
(2)A member or manager (if you are a limited liability company); or
(3)A director, “executive officer”, governor, trustee, or stockholder (if you are an association or corporation).
7.”Medical incident” means any act or omission:
a.Arising out of the providing of or failure to provide professional medical or dental services by:
(1)The insured; or
(2)Any person acting under the personal direction, control or supervision of the insured.
b.Arising out of the insured's serving as a member of a formal accreditation, standards review or equivalent professional board or committee.
Analysis
The definition of “business entity incident” acts as a complement to insuring agreement B, making the point that what is covered by PR 00 01 are acts or omissions dealing with professional medical or dental services on the part of the groups listed in the coverage B insuring agreement. The insurance under coverage B applies to injuries caused by a business entity incident that occurs during the policy period and that takes place in the coverage territory (as defined on the policy).
A “medical incident” is defined on PR 00 01 in connection with coverage A, individual professional liability coverage. That coverage applies to injuries caused by a medical incident that takes place in the coverage territory and that occurs during the policy period, and the injuries must arise out of the individual insured's profession as a physician, surgeon, or dentist.
Furthermore, many physicians, surgeons, and dentists have an exposure to professional liability arising out of the acts of their employees—nurses, medical technicians, hygienists, etc.—or some other person acting within their control or supervision. Coverage A insures against that exposure through the use of the key term “medical incident” in the insuring agreement, and the definition of medical incident clarifies the point.
If the insured desires professional liability coverage under a claims-made form, PR 00 02 09 08 is available. This forms combines the coverages, exclusions, and conditions found on PR 00 01 with the trappings of the claims-made policy: retroactive date, extended reporting periods, and the requirement of notifying the insurer of a claim made against the insured during the policy period or an extended reporting period. For more information on claims-made policies, see Claims-Made CGL Form.
The extended reporting period under PR 00 02 is of unlimited duration and is available only by an endorsement and for an extra premium charge, with only some exceptions. An extended reporting period of unlimited duration will be automatically provided, without additional charge, because of the following exceptions: the named insured's death; if the named insured becomes continuously and permanently disabled for six months and is unable to carry out his or her profession or practice; or if the named insured retires permanently after attaining the age of fifty-five, and has accumulated five or more consecutive years of claims-made coverage.
PR 00 01 and PR 00 02 cover only liability from professional services or failure to render them. It does not cover liability from premises and other acts not connected with professional work. For such coverages, the insured needs a commercial general liability policy.