Professional Liability Claims &
Reporting Triggers; Tips & Traps
Presented By: Lee Nestel, President CBIZ Insurance Services &
Frank Ceurvels, Business Administrator, Ramapo Indian Hills
Regional High School District
Today’s Goal – Avoid a claim denial!
• Understanding when to report
• Understanding what should be reported
• Understanding reporting parameters
• Understanding claims process
Claims Made (usually E&O/Professional)
vs. Occurrence (usually General Liability)
Claims Made
Occurrence
• The coverage trigger is
• The coverage trigger is
the date the claim is first
the date of the incident
asserted, however
giving rise to the claim.
circumstances which can
result in a future a claim
must be reported.
• Be mindful of a listed
Retroactive date, full
prior acts is best.
Duty to Report vs Duty to Defend – Claims Made
Duty to Report
• When you know of a
potential claim
Duty to Defend
• May or may not trigger
defense
• When you have an actual • Will trigger defense if
covered claim
allegation is not
excluded
Duty to Report
• You must give prompt notice to the insurer of any claim or
any circumstance which might result in a future claim
against your Board
• Notice must be given prior to the expiration of the policy
period when you first became aware of the claim or
potential claim (usually have 30-60 day “grace” period).
Red Alert! Check with your broker in case you have no
“grace” period.
A Claim matter may trigger both General &
Professional Liability
• Example I: A student is allegedly injured in an altercation and the
Notice of Tort alleges both bodily injury and violation of civil rights.
• Example II: A student alleges a bully caused emotional distress
which resulted in medical care in the Notice of Tort. However,
when the law suit is filed it also includes an allegation of a Civil
Rights violation.
When you receive a Notice of Tort, always put both the General
and Professional Liability insurers on notice even if it appears
to be just bodily injury.
Danger of Not Reporting
• Prior Knowledge - Most, if not all policies exclude claims
arising from any circumstance which you reasonably
could expect to result in a claim and knew of the
circumstances prior to the beginning of the policy period
in which the claim was formally asserted.
• No penalty for reporting a potential claim
• Danger – You are stuck with an uninsured loss and all
the negative consequences which accrue.
Choice of Counsel
• Policy language dictates choice of counsel OR insurer
assigns
• If policy allows choice of counsel, it is subject to approval
by insurer. An application by counsel is usually required
along with a fee agreement (acceptance of the insurers
fee schedule).
• If policy does not allow choice of counsel (most often the
case), the insurer will assign defense and take over from
there. $$$ spent before assignment not counted towards
deductible. Speak up if assigned counsel does not
share Board’s philosophy and demand consistency.
Types of Claims & Communications to Report
• Tort Notices (even if only BI) & Due Process Requests
• Any Legal Process/Investigation (EEOC, DOE, PEOSHA,
OPRA Disputes & HIB Disputes etc.)
• Grievances & PERC – when circumstances could result
in a future claim (ex.: discrimination & hostile work
environment)
• Employee Terminations for cause
• Communications from Attorneys or Anyone demanding
money or services
Types of Demands
• Demand for money
• Demand for services
• Demand for specific performance – “my star child should
be the lead in the play or else I will sue…” or “I want that
coach fired”
• Demand to stop an activity – “do not cut down those
trees”
Matters Not Covered
• Legal action when the Board is the Plaintiff
• Punitive Damages
• Generally speaking, matters which are the subject of
another policy (General Liability, Workers Comp…)
• Coverage does not extend to protect 3rd parties &
independent contractors (ex.: Curriculum Consultant or
Grant Writer). They need to purchase coverage to
protect their interests.
Reservation of Rights Letter (ROR)
• Sent by insurer for all professional liability claims
• Discusses potential aspects of a claim that could later lead to a
denial. Without this letter, the insurer would be “estopped” from
dropping defense coverage. The ROR is for the insurer’s benefit.
• If the letter assigns counsel, it is an indication that the claim is
more likely to be covered
• If the letter does not assign counsel, either the claim threshold has
not been met or there may be a coverage “problem”. The ROR
may be a defacto coverage denial.
Reservation of Rights Letter (ROR) Continued
• Lawsuit pleadings may include allegations of Bodily Injury
(BI). The ROR will disclaim coverage for the BI aspects
of the claim except with respect to employment claims
alleging emotional distress. Panic Attack Alert - ROR
usually does not explain that the BI portion of the claim
should be addressed by the Board’s General Liability
policy.
• You can and should dispute an improper claim denial.
Non-Waivers
• Letter that requires signature of the Insured (used rarely)
• States the company does not believe there is coverage in the
policy for the claim but will still proceed investigating it
• Maintain the right to deny the claim at any point in time
• May be the first step of a claim denial.
• If insured refuses to sign letter, insurer likely to send a
Reservation of Rights letter.
What Constitutes Proper Notice?
Letters, Emails & Legal Notices Addressed to:
•
•
•
•
•
•
•
Business Administrator: Yes
Board Attorney: Yes
Superintendent: Yes
Board Member: Yes
Principal: Probably
Any Other Employee: ?
Anonymous letters: ?
Best scenario - policy language stating that notice only valid if given to
named positions: Super, BA, Board Attorney, or Board President
Claims Made Coverage; Consider Tail vs. No
Tail When Changing Insurers
• Policy language usually includes a “free” Automatic Tail (usually 3060 days) and Optional Tail (usually one – three years) for an
additional premium
• The Optional Tail extends the amount of time you have to report a
claim that would have been covered by the expiring policy when you
switch to a new insurer or you close your school.
• Verify via written request to your Superintendent, Director of Special
Services, Board Attorney and Principals whether there are any
potential claims on the horizon. Prior to expiration, report all potential
claims to the current insurer. Report potential claims on application
for replacement coverage as well. Confirm strategy with Broker.
Questions?