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Broker vs Direct Writer: What Does This Mean for Professional Liability Insurance?

October 30, 2018


Lawyers must understand that in today’s business environment, professional liability insurance provides a necessary component for any risk management strategy. Even groundless claims can cost thousands of dollars to defend.

When looking to purchase professional liability coverage, one decision always comes first. Is it better to work with a Direct Writer or an Independent Insurance Broker?

An insurance company that is a Direct Writer has employees who sell and service policies on their employer's behalf. As a result, a Direct Writer policy is processed exclusively with one insurance company.

An Independent Insurance Broker offers access to a variety of professional liability insurance companies, and therefore presents a greater selection of policy options. A policy purchased through an Independent Insurance Broker offers the best of several policy comparisons from many insurance companies. One source, many options.

And contrary to a common misperception, it does not inflate the premium to purchase an insurance policy with the help of an independent insurance broker. Insurance companies cannot surcharge a premium for working with a broker.

Specialized Insurance Brokers Represent the Client’s Interests

An Independent Insurance Broker does not work for one insurance company, instead he/she functions independently as an advocate for their client’s business within the insurance marketplace. A good broker assists in completion of the application and expertly represents their client to the underwriters. A reputable broker relies on established relationships with their underwriters, putting their client in the position to receive the most appropriate professional liability insurance policy at the best rate and with the best coverage terms.

Once coverage is obtained, the broker continues to act as an intermediary between client and insurance company to assist with any midterm servicing requests including claim reporting. A reliable broker offers invaluable expertise and professional advice throughout the year--not just at renewal time. In this way, an Independent Insurance Broker is an extension of their client’s business, a trusted expert ready to assist whenever questions and concerns arise. A specialized broker provides advice on the most optimal approach to the management of professional liability insurance risk.

Time Is Money

Save time by having an Independent Insurance Broker handle the many steps involved in the purchase of professional liability insurance. The broker does the necessary due diligence. An Independent Insurance Broker offers one-stop shopping to simplify their client’s application process. On the contrary, a Direct Writer requires the client perform their own due diligence.

The Direct Writer process requires the buyer to:

When it comes time for renewal, the client may even have to repeat the process on their own.

Where time is money, the Independent Insurance Broker relationship is one that pays off. Save money with better choices. Save time for core business operations.

All Professional Liability Policies Are Not Created Equal

Generally, professional liability insurance provides coverage for actual or alleged errors, omissions and/or negligence from the performance/non-performance of professional services. However, these policies are not standardized and can vary greatly in coverage provided.

For example, some policies may, or may not, cover the cost of defense in an administrative or disciplinary action by a regulatory agency. Other policies may not provide any compensation for expenses or loss of income should the need arise to take time away from work to attend a hearing or a trial. Some policies require an actual lawsuit or demand to trigger coverage. Other policies are triggered with the presentation of a circumstance or fact that could result in a claim.

Know your coverage. How do policies compare? When it’s time to compare policy details, it is the Independent Insurance Broker who can point out not only the benefits, but also the shortcomings.

Broker Is Better

Considering that it does not cost any more money to work with an Independent Insurance Broker who specializes in professional liability insurance, the choice is clear. An Independent Insurance Broker can deliver more coverage choices and provide better customer satisfaction.

Editors Note: This post was originally published in December 2015 and has been completely revamped and updated for accuracy and comprehensiveness.

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