Alert your insurance carrier when facing major liability
Don’t hesitate to notify your insurance carrier when a crisis hits and you may face major liability, says Michael Zuckerman, JD, assistant professor of risk insurance and health care management at Temple University’s Fox School of Business and Management in Philadelphia.
"You don’t want your carrier to read about it in the newspaper," he says.
A quick notice to your carrier can help prevent the carrier from claiming you compromised its defense by waiting too long to inform it, he says. Your insurance policy probably includes language declaring that the carrier can deny coverage if you keep an incident secret and try to handle it on your own.
The risk manager at Sturdy Memorial Hospital in Attleboro, MA, recently rocked by revelations that dozens of prostate biopsies were misread, agrees with Zuckerman. Sharon Simoneau, ASHRM, CHRM, director of risk management, quality assessment, and medical staff services, says she notified the hospital’s insurance carrier almost immediately upon being informed of the problem.
That does not mean that you have to notify your carrier of every little thing that happens, but Zuckerman suggests playing it safe. If the incident is big enough that you think your carrier might want to know, go ahead and notify the carrier, he says.
"Some will say there is a downside to that because it may have an impact on your renewal or your rates," he says. "But if no case materializes or there is no significant payout, the carrier suffers no losses and there should be no damage to the relationship. It’s possible they could say, You have a lot of things going on so we’ll raise your premiums,’ but I don’t think that outweighs the risk of keeping secrets from your carrier."
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