Don't wait until claim time

Thursday, October 28, 2010

Q. What is product liability insurance and am I at risk if I don't have it?

A. I've traveled the western United States analyzing HME policies and coverages, and I've found this liability coverage left off of a surprisingly large number of contracts.

Do you know if your policy protects you if, for instance, a client is hurt when his crutch breaks? What happens if a wheelchair wheel rolls off or a mechanical wheelchair does not follow driving instructions? These and many more liability claims happen every day of the year. If you're not protected correctly, you have what we call a "gap" in coverage.

Product liability insurance is called Products & Completed Operations, and it protects HME providers against bodily injury or property damage to third parties because of injury from items that they sell, rent or repair. A surprising number of insurance carriers exclude this coverage and some potential clients don't even know it's excluded--that is, until claim time arrives.

Without correct coverage, you may be liable for a multi-million dollar loss. If you're let off easy, you may be liable for $50,000 in a defense cost only judgment. Remember, when disabled people become hurt, the cost of rehab can be very high.

Other important items: Watch your liability deductible. Some coverages have a zero deductible, but we have seen others as high as $10,000. Usually the premium difference is negligible.

Additionally, many carriers hide behind the "audit" clause, which charges additional premium dollars based on the HME provider's gross receipts for the past 12 months. This can be a killer--unknown expenses hit your office when you least expect it. Many clients are not aware they have an auditable policy until the forms and invoices hit their desk. Then, it is way too late. hme

Weston Millward is the CEO of The Millward Agency. Reach him at 801-571-1100 or