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In: Operations Management

Analyze the major connections between liability of professionals, insurance policy coverage, and settlement of claims due...

Analyze the major connections between liability of professionals, insurance policy coverage, and settlement of claims due to health care liability issues. Consider the concept of insurance coverage denial. Ascertain the manner in which such denial is built on the limitation clauses and conditions set forth by the insurance provider.

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Professional liability defines the potentially harmful occurrences that could harm the practice of traditional professions including accountants, real estate brokers, lawyers and attorneys, and consultants. In some corporate engagement, a personal or organizational error of commission or omission could attract huge damages for third parties. These losses could compromise one’s entire career. As observed by, Mulligan and Oats, human and processes errors are common in traditional professionals. It is thus vital to identify the risks facing professionals and coming up with protection models.
The need to protect one's reputation, business, and financial viability, professionals came up with professional liability insurance cover. An insurance cover is an agreement between a client and an insurer dictating the terms of their engagement in which the clients enjoy full or partial compensation related to a certain occurrence. In this case, professional liability cover compensates professionals who suffer financial or reputation losses through human or processes error. For instance, if an accountant makes an arithmetical error leading to loss of the client’s capital, the insurance cover would negotiate on the accountant’s behalf.
Some professionals are exempted from professional liability insurance due to the nature of their practice. These include doctors, engineers, and architects who are only covered partially. Mostly, the insurance policy covers financial and reputation losses caused by professional’s errors, which are also covered by the commercial general liability policy In health or engineering, a human error could lead to death or permanent injury, which is not covered under the commercial general liability (CGL).
Over the years, insurance companies have sought a solution to the challenge of covering sensitive professionals, especially in the medical field. This has led to the amendment of coverage policies that also respects the federal policies that control these professionals. For instance, an insurance company can cover doctors in situations where their mistakes did not lead to a direct loss of life or harm to humans. Under these circumstances, it is possible to represent doctors and engineers under the CGL policy. Under these rules, an insurance company is only liable to compensate a client if there was no intentional professional misconduct and if the misconduct or omission did not cause direct human harm.
In some instances, an insurance company can refuse to pay the claims brought by the insured if the insured breached the agreement. For instance, if a doctor causes death through negligence, the insurer is not liable to cover the damages as they are not included in the initial agreement between the two parties. Secondly, an insurer might refuse to cover the claims if the insured did not give accurate information during the agreement. The information shared between insurance companies and their clients allow them to calculate the risks and assign premium payments to the clients. In an example, if a doctor fails to reveal he or she suffers from epilepsy, the insurer is not liable to pay any damages caused by the condition in line of the doctor’s work. The central assumption is that the information was not factored in during the premiums calculations and thus not covered by the provided cover. An insurance company defines the terms of engagement under the limitation clause, which specifically dictates the situations under which the insured would be liable to compensation.


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