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Essentials of Risk Management

By Gary A Cook; MSFS, CLU, ChFC, RHU, CFP® CMP™ (Hon)

Medical professionals may not be familiar with the unique differences between the terms – property, casualty and liability.  Property insurance is coverage for the loss of, or damage to, real and personal property caused by fire, theft, explosion, riot, vandalism and a host of other risks.  Casualty and liability are generally interchangeable terms for the coverage of legal liability due to injury to others or damage to their property.

Personal Liability Coverage

One of the most common of all personal liability coverages is the Homeowner’s policy. This is not one policy, but several policy declarations (what is insured – the location), forms, endorsements, and “floaters,” which protect the structure of the home against loss, as well as the personal property (contents) to various degrees. Risks for homeowners need not be consistent across the country and the rates generally reflect the differences. For example, homes in the Midwest need protection from tornados, while homes along the East, West and Southern coasts need coverage for hurricanes and flood risks. 

Policy Form

The Home Owners Policy Form contains five categories of coverage for property:

• The dwelling
• Other structures
• Personal property
• Loss of use
• Additional coverages, such as debris removal, trees, shrubs, and plants, or now, electronic theft (credit card, checking account theft).

The Contract

The contract contains three areas of Liability Coverage:

• Personal liability
• Medical payments to others
• Miscellaneous liability benefits.

The Endorsements

Endorsements are an important aspect of the Homeowners coverage because they permit the customization of the coverage to the unique requirements of the individual. Two examples:

We noted that the West coast does not have tornados, however, they do have earthquakes and therefore, an endorsement can be added which will transfer the risk for earthquakes – or even volcanic eruptions. If the individual doctor has a home business, the business property can be protected against such perils as loss of business records due to fire or water damage. There is, however, no coverage for liability for providing poor professional services.

The Floaters

Finally, the Homeowners policy may contain “floaters” (named because the articles covered are moveable, thus “float around.”). The use of floaters can be very beneficial for coverage of unique or expensive electronic equipment and most commonly, jewelry. The other common personal coverage is Automobile Insurance. Forty-two states have compulsory insurance laws that require insurance on automobiles before it is registered. Various states have unique laws pertaining to:

• Financial Responsibility, or proof of responsibility, by carrying insurance, a cash deposit, bond or security for future liability effective after an accident, which is the major criticism of these laws. 
• Unsatisfied Judgment Funds that compensate individuals who are unable to collect from a judgment resulting from an automobile accident.
• Uninsured Motorist Coverage is required in most states as mandated by state insurance regulators.  In essence, the insured’s own insurance company acts as the insurance company for the uninsured motorist.
• No-fault Automobile Insurance stems from the problems associated with today’s tort law.  These policy forms, however, vary dramatically by state and a full discussion is not possible here.  Information and advice from a professional insurance agent is always recommended.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com  or Bio: www.stpub.com/pubs/authors/MARCINKO.htm

Our Other Print Books and Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

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