©2015, College for Financial Planning, all rights reserved.

Session 16Professional Liability Commercial Insurance

CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAMFinancial Planning Process & Insurance

Session Details

Module 9

Chapter(s)

3 & 5

LOs 9-5

9-10

Explain the different types and characteristics of professional liability insurance.

Explain a characteristic related to commercial property or commercial liability coverage.

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The Planner’s Role

• Identify potential areas of loss

• Quantify risk

• Helping client understand potential risk

• Assess coverage

• Refer to appropriate professionals

• Review annually

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One of the couples you work with just started an accounting practice where he works as the CFO for small businesses that acquire federal and state contracts. His spouse has a successful catering business, employing three full-time employees and 15 contract labor employees; they cater in-home events for wealthy clients, providing the food, bar, and valet services. She has a kitchen in her home, two vans, and a large truck.

What risks could destroy their financial security?

Professional Liability Insurance

Covers failure to use due carein professional practice

• Malpractice: physicians, surgeons, dentistso Can cause physical harm

• Errors and Omissions: insurance agents, attorneys, accountants, etc.o Can cause fiscal harm

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Business Owner Exposures

• Commercial liability• Commercial automobile

o Liabilityo Medical paymentso Physical damageo Truckerso Garage

• Dishonestyo Employeeo Customer

• Property-related

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Commercial General Liability

CGL is designed to protect businesses against non-auto liability, not involvingemployees.• Conditions of premises – customer

slips on a wet floor.

• Business operations – working in a customer’s home, damage is done to the home.

• Product liability – defective product injures a consumer.

• Completed operations – installed electrical fixture shorts out and causes a fire.

• Contingent liability – retailer’s role in selling a manufacturer’s defective product.

• Contractual liability – if a product is not fit for intended use it is a breach of implied warranty.

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CGL Claims

Commercial General Liability availability:

1.Occurrence basis: need only to be in effect on date that an accident causing damage occurs to trigger coverage

2.Claims made basis: trigger for coverage is date claim is made against insured

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Business Auto Insurance

Insured can pick from a wide range of coverage to meet specific business needs:• Any auto• Owned autos only• Specifically described autos• Hired (leased) autos only• Non-owned autos only

Other features are available to business owners to build a policy for their needs.

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Commercial Insurance

• Mostly monoline coverage

• Two primary packageso Commercial

Package Policy (CPP)• larger firms• basic package of

property and liability coverages

• business customizes coverages based on needs

o Business owners policy (BOP)• smaller firms

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Other Commercial Liability Coverages

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Coinsurance for Commercial Property Coverage

insuranceof Amountrequired

eCoinsurancpercentage

cost tReplacemen

amount Maximumrecovery of

DeductibleLoss*required Insurance

carried Insurance

Coinsurance requirement* usually 80% of replacement

cost.This is primarily a concern in

the event of a partial loss.

*Insurance required is generally 80% of current replacement cost, but can vary on a company-specific basis from 70% to 90%.

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Commercial Property Coverages

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Additional Commercial Property Coverages

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Question 1

All of the following professionals would be likely to purchase errors and omissions insurance excepta. financial planners.b. accountants.c. physicians.d. attorneys.

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Want More Review?

Visit eCampus1.Click Programs or Individual Courses tab2.Click Online Classes tab3.Click MyChoice Recordings to expand4.Click Recordings link for your courseFinal recordings contain reviews.

16-15

©2015, College for Financial Planning, all rights reserved.

Session 16End of Slides

CERTIFIED FINANCIAL PLANNER CERTIFICATION PROFESSIONAL EDUCATION PROGRAMFinancial Planning Process & Insurance