In: Operations Management
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.
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.