Professional Risk Facilities (PRF) offers miscellaneous professional liability (MPL) coverage for a multitude of various professions and occupations. The program is currently written on both an admitted and non-admitted basis through SAFECO. However, PRF has an agreement in principal to begin moving this business to the Northland Insurance Group as of January 28, 2002. The Northland policies will be identical to the SAFECO policies.

Another part of this same program with SAFECO is directors and officers (D&O) coverage. The SAFECO program is written on a non-admitted basis. In its press release announcing the agreement with Northland, PRF said: “This [new arrangement] will give PRF the flexibility to provide the same coverages for our insureds but also allow PRF to offer an admitted based D&O product if such is desired. . .PRF's partnership with Northland combines PRF's extensive knowledge and underwriting expertise of D&O and MPL Insurance products with Northland's financial strength and reputation for customer service.”

In its promotional material, PRF lists many ways in which its program is broader than others on the market. Those will be highlighted in this treatment.

2. CONTACT

                Joseph Gravier
     Professional Risk Facilities, Inc.
    300 Old Country Rd.
     Mineola  NY  11501
     Phone: 516-747-6060 (ext 138)
     FAX: 516-747-6074
     mailto:[email protected]

3. UNDERWRITING GUIDELINES

While specific guidelines were not provided, PRF did provide the following list of the classes of business written in this program:

     Accreditation/Credentailing Services

     Actuaries/Actuarial Consultants

     Advertising Agencies

     Answering Services

     Appraisers

     Arbitrators/Mediators

     Auctioneers/Auction Houses

     Bookkeepers

     Broadcasters

     Business Brokers

     Business/Personal Managers

     Claims Adjusters/Administrators

     Coin & Gem/Art Dealers

     Collection Agencies

     Computer/Software Developer Consultants

     Consultants (miscellaneous)

     Construction Managers

     Contest Managers

     Cost Containment Administrators

     Court Reporters

     Credit Bureaus

     Credit Card Administrators

     Dieticians/Nutritionists

     Disaster Recovery Services

     Document Destruction Services

     Drug Testing Administrators

     Employee Benefit Consultants

     Escrow Agents

     Executive Search Consultants

     Financial Planners

     Foreclosure Agents

     Forensic Analysts

     Franchisers

     Freight Forwarders/Customs House Brokers

     Human Resource Consultants

     Insurance Agents/Brokers

     Insurance Consultants

     Insurance Inspectors (non-structural)

     Interior Designers/Space Planners

     Leasing Agents

     Licensing Services

     Management Consultants

     Managed Care Organizations

     Meeting Planners/Event Consultants

     Mortgage Brokers/Bankers

     Multimedia Services

     Notary Publics

     Pension Benefit Consultants

     Photographic Studios

     Premium Finance Companies

     Printing Services

     Private Investigators

     Process Servers

     Property Managers

     Public Relations

     Publishers Liability

     Quality Assurance Consultants

     Real Estate Agents/Brokers

     Recording Studios

     Referral Services

     Risk Managers/Insurance Consultants

     Safety Consultants

     Security Guards/Alarm Monitoring Services

     Social Service Agencies

     Sports & Entertainment Managers

     Storage/Archive Services

     Structured Settlement Consultants

     Tax Preparers (non-CPA)

     Telecommunications Consultants

     Temporary Placement Agencies

     Testing Laboratories

     Third Party Administrators

     Title Agents/Abstractors

     Trustees

     Utilization Review Consultants

     Wire Transfer Services

     Other (Case by Case basis)

4. AVAILABILITY OF COVERAGE

All states.

5. LIMITS AVAILABLE/DEDUCTIBLE

While the insurer will consider any limits request, limits from $250,000 to $5 million are indicated on the application. That application offers deductibles ranging from $2,500 to $25,000.

6. INSURING AGREEMENT

This policy has a two-part insuring agreement. The first deals with payment of judgments; the second with defense costs.

The insurer promises to pay on behalf of the named insured any amount for which the insured becomes legally liable. The event for which the insured is legally liable must be a “covered claim” arising out of a “wrongful act.” The wrongful act must occur during the conduct of “Professional Services” or “E-Professional Services.” The claim must be made and reported to the insurer during the policy period. The policy also offers both an extended reporting period and a retroactive date.

The second insuring agreement is entitled “Judgments, Settlements, Claim Expenses, and Policy Territory .” The first paragraph details the insurer's right and duty to defend any covered claim, even if groundless. The PRF policy also covers defense costs for fee and commission disputes. The policy also allows the insured to appoint his own attorney, with the insurer's approval. The insurer must approval of any settlement.

If the insurer offers a settlement to the claimant, that settlement must also be approved by the insured. Once the policy limit is exhausted, the insurer's obligation to defend ends. The policy applies worldwide, as long as the suit is brought in the United States .

7. DEFINITIONS

The following terms are defined:

A.     Application—the signed application and any other materials submitted with the application to the insurer. The application and such materials are part of the policy.

B.     Affiliate—persons or entities related to the named insured. Such a relationship must be via “common ownership, control or management.” A subsidiary does not qualify as an affiliate.

C.     Bodily Injury. The definition includes mental injury, anguish, stress, etc.

D.     Breach of Confidentiality—is the unintentional disclosure, by the insured, of confidential information. If someone gains unauthorized access to the insured's computer network, any information disclosed is not such a breach.

E.     Claim—a written demand for monetary or nonmonetary damages. Note that many policies do not cover nonmonetary damages.

F.     Claim Expenses—include defense expense. The definition makes it clear that all such expenses are included inside the limit of liability.

G.     Damages—include a monetary award or a settlement. The PRF policy includes pre and post-judgment interest. The insured may also choose to include punitive damages. The policy allows for punitives to be covered in the best venue: “The insurability of such damages shall be governed by the internal laws of any applicable jurisdiction which permits coverage of such damages.”

H.     E-Professional Services—the services specified in the declarations that the insured performs via the Internet or a network of two or more computers.

I.     Extended Reporting Period—as described on the declarations.

J.     Individual Insured(s)—includes past, present, and future: partners, directors, officers, stockholders, members, management committee members, or employees. The policy also extends individual insured status to independent contractors for “Professional Services” they perform on behalf of and at the direction of the named insured.

K.     Insured(s)—includes the individual insureds (above) and the insured company, which is defined as: the named insured; any subsidiary of the named insured; or a joint venture. The policy goes on to define joint venture as a business endeavor between the insured and at least one other party for whom the insured is performing professional services.

L.     Named Insured—includes all different types of organizational structures such as an individual, corporation, partnership, limited liability company, limited partnership, or any other entity named;

M.     Personal Injury. This is a broad definition that includes almost any injury other than bodily injury. It covers the following offenses:

     1. False arrest, detention, or imprisonment.

     2. Malicious prosecution.

     3. Wrongful eviction.

     4. Slander.

     5. Violation of a person's right of privacy

N.     Policy Period.

O.     Pollutants—includes those items listed by the U.S. Environmental Protection Agency (EPA).

P.     Professional Services—are described in the declarations.

Q.     Property Damage.

R.     Subsidiary—is identified on the declarations; the named insured must own at least 50% of its stock.

S.     Retroactive Date—is shown on the declarations.

T.     Wrongful Act—is what the policy covers. It includes: any “actual or alleged breach of duty, neglect, error, omission, Personal Injury or Breach of Confidentiality” that the insured commits in the conduct of the Professional Services or E-Professional Services, described on the declarations.

8. EXTENSIONS OF COVERAGE

In addition to covering the liability for wrongful acts, the PRF policy extends coverage to:

A.     Estates, Heirs, and Legal Representatives. If an individual insured dies or becomes incapacitated, the policy extends coverage to his estate, etc. In the case of bankruptcy of any insured, the policy will likewise extend.

B.     Marital Spousal Liability. Claims may sometimes be made against the spouse of an individual insured, simply due to his/her status as a spouse. In that case, the policy considers such a claim to be made against the individual insured.

C.     Supplemental Payments. The policy provides, outside of the limit of liability, coverage for certain expenses incurred by the insured at the request of the insurer. Payments include up to $250 per day for lost wages. This coverage is capped at $5,000 per claim.

9. LIMITS OF LIABILITY & DEDUCTIBLE

The amount shown in the Declarations is the most the insurer will pay for any one wrongful act, during the policy period and any extended reporting period.

All claim expenses are included within the limit of liability.

The declarations shows an “Each Policy Period Aggregate,” which represents the insurer's maximum liability for damages and claim expenses.

Claims that arise out of interrelated Wrongful Acts are treated as one claim.

10. EXTENDED REPORTING PERIOD

If either the insured or the insurer cancels or nonrenews the policy, the insured may purchase an extended reporting period. The coverage during the extended reporting period applies only to wrongful acts committed during the policy period.

Note that this is a bi-lateral extended reporting period. Even if the insured requests that his own policy be cancelled, the insured may still purchase an extended reporting period.

The following extended reporting periods are available:

1.     One year at 75% of the annual premium.

2.     Two years at 125% of the annual premium.

3.     Three years three years at 150% of the annual premium;

11. EXCLUSIONS

The policy does not provide coverage for the following claims:

A.     Fraud, dishonesty, or criminal acts committed by the insured. The policy does, however, cover claim expenses until the insured has been adjudicated as guilty. It also makes an exception for any insured not involved in the criminal behavior.

B.     Bodily injury or property damage.

C.     Those alleging illegal profit or gain.

D.     Those claiming discrimination. However, expenses are paid until a final adjudication is reached. The exclusion does not apply to any insured who had no knowledge of the wrongful act.

E.     Wrongful acts committed prior to the retroactive date.

F.     Those brought by one insured against another insured. However, the policy does make these two exceptions:

     1. Claims brought by Affiliates are not excluded if they are brought independently of the Insured; and

     2. Cross claims/third party claims for contribution or indemnity do not trigger the Insured vs. Insured exclusion.

G.     From current or former employees or job applicants.

H.     ERISA claims

I.     Securities Acts claims.

J.     Contractual liability. However, this exclusion does not apply if liability would have attached to the Insured even in the absence of such contract.

K.     Nuclear.

L.     Pollution.

M.     Infringement of copyright, trademark, patent, etc.

N.     Against a subsidiary for acts when it was not a subsidiary of the named insured.

O.     Breach of warranty.

12. GENERAL CONDITIONS

The following conditions apply:

A.     Claim Reporting—claims must be reported no later than 60 days after the end of the policy. The insured may enter into arbitration only with the consent of the insurer. The insured must cooperate with the insurer and do everything to protect the insurer's rights under the policy.

B.     Notice of Potential Claims—if the insured becomes aware of a possible claim, the insurer must be notified of the circumstances.

C.     Acquisition or Creation of Another Entity—the policy applies to newly acquired or created entities. If the new entity's revenues exceed 10% of the insured company's annual revenues, then the new entity must be reported to the insurer within 90 days.

D.     Action Against the Insurer.

E.     Other Insurance—this policy is excess over any other valid and collectible insurance

F.     Subrogation.

G.     Notice of Cancellation—the insurer must give 60 days notice; 10 days for nonpayment cancellation.

H.     Alteration and Assignment—must be first approved by the insurer.

I.     Representations.

J.     Bankruptcy or Insolvency—of the insured does not alter the insurer's responsibilities under the policy.

K.     Titles of Paragraphs—this condition emphasizes that the titles are inserted only for convenience and do not affect any provisions of the policy.