Pharmacists Professional Liability Insurance Coverage Analysis

PHARMACISTS PROFESSIONAL LIABILITY INSURANCE COVERAGE ANALYSIS

(June 2020)

INTRODUCTION

Individual pharmacists have significant professional liability exposures. Many people consider pharmacists to be their most trusted health care professional. Filling prescriptions with the appropriate medication is only one part of a pharmacist’s job, but it is the most hazardous part of the job. Providing the wrong medication and providing incorrect doses are the leading causes of claims. The pharmacist also provides advice to the patient regarding the medication’s possible side effects and identifies interactions it may have with other prescribed medications.

Pharmacists are also viewed as advisors regarding over the counter medications and ointments as well as helping customers decide when to consult their physician. Individuals who do not have health care coverage may view the pharmacist as their only health care professional as they attempt to treat physical conditions with only over the counter medications. Pharmacists are permitted to provide limited primary care services such as vaccinations in some states.

In addition to covering the practice of filling prescriptions, a typical individual pharmacist professional liability insurance policy also covers the following activities:

 

Example: Ken works in a pharmacy situated next to an elementary school. He regularly gets calls or visits from the school secretary for advice on ways to treat an illness or an injury.

Example: Jessica had a negative reaction to a prescription she had recently filled and went to the ER. The hospital was surprised by three very similar situations. An investigation was started that revealed that the new pharmacist, Paula, had misread the requirement that the drug be refrigerated at all times. This resulted in the medication being stored at room temperature and thereby injuring any patient taking it.

 

An individual pharmacist’s professional exposure is covered under an employer’s professional coverage, but most know that limited coverage is not sufficient because it is really meant to protect the employer, not the employee. When the employer’s limits are used up, there are no limits left to protect the employed pharmacist. If the employer’s policy becomes void because of a misrepresentation it made, there is no coverage at all for the individual pharmacist. In addition, the employer’s policy provides coverage for the employee pharmacist only when he or she performs services for the employer. There is no coverage for any allegations that are not work-related.

The individual pharmacist professional liability insurance policy fills the gap for the employed pharmacist. It responds as excess over any employer’s policy. However, it also responds when there is no underlying coverage or policy because the pharmacist was not employed at the time, provided services as a volunteer, or provided services in other situations that were not related to the employer.

 

A pharmacist is not only responsible for prescription drugs. He or she makes recommendations on over the counter remedies that are found in most medicine cabinets and provides consultative assistance regarding possible drug interaction. The pharmacist is considered by many to be their most trusted health care provider.

However, this is only professional liability coverage. It is not general liability coverage.

Example: Yancy is a pharmacist who works for Metro Clinic Pharmacy. He is on break when he hears a loud crash. A display of Sterile Water bottles collapsed and swamped the adjacent aisle floor with water. Yancy rushes to the pharmacy’s back room, grabs a mop and a large wheeled bucket, and heads for the spill. Unfortunately, he collides with an elderly female customer who slips and falls on the wet floor. She later sues for her injuries. There is no coverage for that suit under Yancy’s professional liability coverage because it did not have anything to do with Yancy’s duties as a pharmacist.

PROFESSIONAL LIABILITY POLICIES

A number of insurance companies and specialty underwriters offer tailored, self-contained professional liability policies for individual pharmacists. The insuring agreements and other provisions in these different policies are not identical, but they are usually similar. The following analysis reflects a cross-section of professional liability coverage forms and policies. Because coverage is not standardized, it is important to compare the coverage differences between different carriers when presenting options to a client.

Related Article: Individual Pharmacist Professional Liability Comparison Chart

INSURING AGREEMENT

The insurance company agrees to pay all sums that the named insured is legally obligated to pay as damages that are from bodily injury, property damage, or personal and advertising injury because the named insured either provided or failed to provide professional services associated with pharmacy practices. This insurance responds only after other insurance available to the named insured for the damages is exhausted. Payment is subject to the limit of liability and any deductible (retention). It pays only if the insurance described in the policy applies to the damages.

 

Example: Trudi is a newly employed pharmacist at Harry’s Drugland. A long-time customer sues both Trudi and Harry’s Drugland, claiming that Trudi filled a prescription with too high a dosage. The customer’s liver was seriously damaged before the customer’s doctor discovered the problem. Harry’s Commercial General Liability (CGL) policy responds to both Harry and Trudi. Trudi’s pharmacists professional liability policy responds to Trudi’s benefit but only as excess over Harry’s policy.

 

The bodily injury or property damage must occur during the policy period. It is important to note that the professional activity could occur prior to the policy period.

 

Example: Jenny is stocking up on her prescriptions before the end of the year. She refills six different prescriptions on 12/31/19. Trudi fills the prescriptions but, because of a change in the generics, she makes an error in the substitutions. Jenny does not notice the substitution error when she starts taking the prescription on 01/15/20. She has a severe reaction on 01/16/20 and is hospitalized for ten days. Jenny sues both Harry’s Drugland and Trudi. Trudi moved her coverage from Cheapo Insurance to Generous Insurance on 01/01/20. Although the professional incident occurred during Cheapo’s policy term, Generous must respond because the bodily injury occurred during its policy term.

 

Personal or advertising injury is covered based on the date of the offense that caused the injury.

Example: Trudi discussed filling Jenny’s multiple prescriptions with a friend on 12/31/19. That friend was a reporter who used that information in an article about Jenny that was published on 02/01/20. Jenny sued Trudi for the personal injury she sustained because Trudi had betrayed her confidence. Because Trudi committed the offense on 12/31/19, the Cheapo policy responds, even though the personal injury did not occur until the article was published.

 

This policy is excess over any underlying coverage available to the named insured. This policy does not respond until the underlying limits are used up.

 

Example: Harry’s policy covers Trudi, and Harry’s Drugland’s carrier must defend her. Unfortunately, Harry’s aggregate limit is used up paying other claims against Harry. At this point, Trudi’s carrier must step up and take on all defense and settlement expenses.

 

The insurance company has the right, but not the duty, to assist the underlying carrier, the named insured, or any other person or party involved with defense or settlement for the underlying carrier in its claim investigation or settlement.

There may be no underlying insurance, or the underlying insurance may not be properly defending the named insured. In that case, this policy has a duty and right to defend a suit brought against the named insured. It also provides defense if the underlying insurance attempts to subrogate or tries to obtain money from the named insured in some other way.

 

Example: Trudi is having a very rough time. Harry’s is trying to subrogate against her because it considers her release of confidential information criminally incompetent. Harry’s also recommends revoking her license. In addition, Justin (to whom Trudi had given advice) sues her because he took her advice, and his condition got worse, not better. Trudi’s individual pharmacist professional liability insurance policy defends her in both of these cases.

Regardless of the defense this policy provides, it ends when the limit of liability is used up by payments made to settle a claim, for medical costs, or because a court judgment required payment.

 

Example: The costs to settle Trudi’s problems are significant, and she is glad they spanned two different policy periods. The 01/19 policy term paid the $250,000 bodily injury settlement. The 01/20 policy paid the $750,000 personal injury settlement. Thanks to that split, the insurance policy continued to defend her in the lawsuit that Justin brought.

SUPPLEMENTAL PAYMENTS

The costs to investigate, defend, and settle claims can be substantial. An important point to consider when comparing coverages is whether the defense costs are included within the limits of insurance or are outside the limits. When such expenses are included within the limits of insurance, each dollar of expense reduces the limit available to pay losses. When defense is inside the limits of insurance, the following supplemental payments are also often covered inside the limits as long as they were incurred to investigate a claim, defend a suit, or settle a claim. When the defense is outside the limits, these expenses would also be outside the limits.

 

Example: ABC Insurance asked Aaron,  the named insured, to go to Chicago for a deposition. Aaron decides to travel first class, stay in a luxury hotel suite, and eat at a five star restaurant. Although the deposition was completed in one day, Aaron also stayed for the entire weekend. ABC rejected many of these expenses, and instead paid amounts it considered reasonable. Aaron was responsible for the rest.

                       

LIABILITY LIMITS

The declarations has two limits.

The aggregate limit is the most the insurance company pays regardless of the number of insureds, claims made or suits brought, policy periods over which the loss occurred, or persons or organizations that make claims or seek compensation.

The occurrence limit is the most the insurance company pays due to bodily injury or property damage that arises from one occurrence. It is also the most paid for personal or advertising injuries that a single person or entity sustains. This is subject to the aggregate limit.

It is important to understand an occurrence. The following are situations that involve an occurrence:

 

Example: Dr. Crisp asked John’s Compounding Pharmacy to prepare unique combinations of FDA approved drugs for his patients. John always prepared batch quantities sufficient to fill 50 prescriptions. John made an error in one batch, and a number of patients had adverse reactions. All claims made against John because of his error are considered part of the same occurrence.

                       

 

Example: Millie, the pharmacist on duty, received a package with a note that stated that the drug inside required refrigeration. She removed the drug from the container and planned to put it in the refrigerator, but there was no room. The phone rang, and her day at the pharmacy started. The container was eventually placed on a shelf, and prescriptions were filled from it. The pharmacy did not discover the error until a number of patients became ill. All losses due to the drug spoiling because of the lack of refrigeration are considered a single occurrence.

 

Example: Kelly received a new prescription. The prescription was for 5 mg tablets, but Jim, the pharmacist, misread it and provided 50 mg tablets. Kelly took the pills as ordered and refilled the prescription twice before she returned to her doctor. The doctor was surprised at the side effects and was appalled when he saw the dosage and noted the side effects it produced in Kelly. Kelly had to undergo a lengthy and expensive rehabilitation. Even though Jim filled the prescription three separate times, it was still considered a single occurrence.

                       

 

Example: Kelly’s prescription was first filled during Jim’s 01/01/19 to 01/01/2020 policy period, and the second was filled during his 01/01/2020 to 01/01/2021 policy period. Only the policy with the 01/01/19 to 01/01/2020 policy period responds.

DEDUCTIBLE

Deductibles in individual pharmacists professional liability insurance policies apply on a per-claim basis to all damages and/or claims expenses that arise from any one act or omission. The insurance company is obligated for only the amount that exceeds the deductible.

Insurance policies with such deductibles usually have provisions where the insurance company pays the amount of deductible as part of the settlement. The company then seeks reimbursement of the deductible amount from the named insured. This allows the company to handle the claim more effectively and efficiently. A deductible of $500 is often used.

Note: Some companies write this insurance without a deductible.

EXCLUSIONS

Exclusions that apply to individual pharmacists’ professional liability insurance are not uniform. However, the following exclusions should be expected because they restrict coverage to only the individual’s action and to legal actions that are common to pharmacists. There is no coverage for the following:

 

Example: Jerry is unhappy when his fiancé leaves him for someone else. One day, his ex-fiancé’s new boyfriend brings in a prescription to be filled. Jerry fills it with what he thought was a harmless but ineffective substitute. The boyfriend has a severe allergic reaction to the drug. An investigation reveals Jerry’s malicious actions, and his individual pharmacist professional liability insurance policy does not respond.

 

Example: Patricia and Christopher are volunteers representing the local Pharmaceuticals Association at a health fair. Their task is to provide vaccinations. Christopher does not use proper protocol when he administers the vaccinations. Christopher and Patricia are both sued when a child has a reaction. Christopher’s policy defends and indemnified him but does not represent Patricia even though the only reason she was involved was due to Christopher’s actions.

 

Example: A customer wants to try out a medical device and asks Korina to watch her coat while she focuses on the device. Korina is distracted momentarily, and somebody steals the coat. There is no coverage for Korina when the customer sues her for the theft of the coat.

                       

 

Example: Millie strikes and injures a customer as she attempts to place the customer’s walker into her vehicle. There is no coverage for the customer’s injuries because it resulted from Millie loading a vehicle.

 

Example: Jason works for Acmetown Family Pharmacy. He files a claim to recover more than $6,000 in expenses for a recent incident. His insurance company denies the claim because they were due to the legal expenses related to his arrest for filling fake prescriptions for OxyContin and Percocet.

                       

 

Example: A pharmacist is sued by a customer who lost a lawsuit. The customer alleged that the pharmacist gave him wrong advice about how to file an argument in a claim against a local clinic. The pharmacist’s insurance company rejects the claim because it involved legal advice, not pharmaceutical advice.

                       

o    Violations of statutes or regulations that apply to pharmacy services

Related Court Case: Insurer Must Defend Under Druggists' Policy (Classic)

o    Any type of criminal act

o    Filling or dispensing prescriptions based on telephone or online discussions unless the customer has a relationship with the prescribing physician that includes a physical examination

o    Compounding that involves using drugs that have been withdrawn from the market because they are no longer considered safe

Example: An angry neighbor sued Jamie’s Drug Corner. Jamie’s pharmacist disposed of some expired drugs in the store’s dumpster. The dumpster was filled to overflowing. Some of the pills fell out, and the neighbor’s pet ate them. The suit was for the cost of the veterinarian’s bills and a long stay in an animal hospital. Jamie’s claim was denied because disposing of the drugs in that way was against industry standards and in violation of a municipal ordinance.

 

Example: Opie really enjoys talking with Tonya. She leaves a prescription with him, and he tells her he will switch her pills to something else unless she goes out with him. He says it jokingly, but Tonya takes it seriously and sues him for harassment. Coverage does not apply to the costs to defend Opie against this action.

                       

o    An advertisement if the claim alleges either of the following:

o    A breach of contract. This does not apply if the alleged breach is to an implied contract related to an advertising idea.

o    Because the named insured publishes false material

o    Any publication that occurred prior to the policy period

o    Resulting from illegal, discriminatory practices

o    Due to unfair competition 

o    An act by or directed by the named insured with full knowledge that injury would result

 

Example: Jolly is angry because his councilman refuses to consider pushing for a variance that he needs to add a garage to his property. Seeking revenge, Jolly tells his brother to leak information about recent purchases the councilman made at the store. The councilman sues the brother and Jolly for defamation and humiliation. This policy does not cover this claim.

 

o    Resulting from the violation of copyright and other types of intellectual property rights. This does not qualify if the only violations are within the named insured’s advertisement.

 

Example: Phoebe is asked to compound a drug based on a formula used by a major pharmaceutical company on a patented drug. The pharmaceutical company sues her for violation of their patent. Phoebe does not have coverage.

           

CONDITIONS

There can be significant differences in actual terms and wording in different individual pharmacist professional liability insurance policies. However, each contains provisions that are similar to those in the common policy conditions and in commercial general liability policies.

Related Articles:

CG 00 01 and CG 00 02–Commercial General Liability Coverage Forms Analysis

IL 00 17–Common Policy Conditions Analysis

The following conditions can be expected:

Assignment

This prohibits the named insured from signing over his or her policy to another without the insurance company’s written permission.

Bankruptcy

This states that the insurance company must honor the policy’s terms and conditions even if the named insured becomes bankrupt or insolvent.

Cancellation

Cancellation terms vary from state to state. This is why a state specific endorsement that explains cancellation and/or non-renewal requirements must be attached.

Change of Terms

This explains that the insurance policy can be altered only by an endorsement or other written document that the insurance company issues.

Insurance under more than one policy

The manner in which an insurance policy responds to other insurance is very important. Individual pharmacists professional policies are generally excess over any other available underlying coverage. This policy will not respond until all underlying limits are used up or have been exhausted. This condition is very important, and its wording may vary slightly between different policies. Of particular interest are the words “excess” and “exhaustion.” In addition, any order of priority of policies must be examined carefully.

Related Court Case: No Contribution Needed by Excess Insurer

 

Example: Bill has an individual pharmacist policy. He is employed by Good Place Pharmacy, which carries both a primary CGL with druggist liability plus an umbrella policy. A very serious claim arises. Bill’s carrier insists that they don’t begin to provide coverage until the employer’s primary and umbrella limits are exhausted. Good Place’s Pharmacy carrier insists that Bill’s coverage must respond after only its primary limits are exhausted.

 

Knowledge of Bodily Injury or Property Damage

The policy establishes the exact date when the named insured officially knows about an occurrence. It may be at the time the named insured receives a suit, claim, or demand. It may be when the named insured reports to any insurance company that bodily injury or property damage has occurred or when the named insured learns of or suspects that bodily injury or property has occurred or is occurring. The date of knowledge of an occurrence is the first of any of these dates.

 

Example: Monica receives suit papers from Phil on 06/15/19. Phil claims that he was injured because of a severe reaction to a drug she had compounded. Monica expected this lawsuit because Phil’s doctor contacted her on 03/15/19 and told her that Phil had been hospitalized immediately after ingesting the first pill. However, the date of occurrence is actually 02/15/19 because that is the date the police stopped at the pharmacy to question her about Phil’s poisoning.

Liberalization

This condition broadens this policy’s coverage without making an additional premium charge if the insurance company broadens its coverage forms during the policy period or within 60 days prior to the policy period.

Misrepresentation, Concealment, or Fraud

This condition voids the coverage provided if the named insured concealed or misrepresented information that relates to the insurance provided or to the named insured’s interest. Coverage is also void if fraud or false swearing takes place with respect to anything that relates to this insurance or handling a claim.

 

Example: Conrad’s application states that he is a licensed pharmacist, but he is not. The policy is voided when a claim is submitted because the insurance company would not have issued it if Conrad had not lied.

Subrogation

This condition transfers the named insured’s rights to sue an entity because of its actions related to a specific claim that the insurance company paid. The named insured must assist the insurance carrier to exercise those actions against that third party. However, the named insured can waive such rights if he or she does so in writing before an occurrence.

Related Court Case: Insured’s Settlement After Loss Impaired Company’s Subrogation Rights–No Obligation to Provide Coverage

 

Example: Joseph is required to sign an agreement with his employer that he will not pursue any action against the employer that relates to a professional incident. Joseph’s carrier pays on his behalf in a lawsuit and believes that the employer should contribute because of extenuating circumstances. However, it cannot pursue the lawsuit because of the agreement Joseph signed when he was first employed. If Joseph had signed the agreement after the loss, the insurance company could have refused to respond to Joseph’s lawsuit or could have demanded that he reimburse it for the amount it could have collected from the employer.

Suit Against Us

This condition explains when the insurance company cannot be sued and when it can be sued. The most important point is that no suit can be brought until and unless the named insured fulfills its obligations according to the policy’s terms and conditions. In addition, the company cannot be sued until there is a judgment or settlement that determines the named insured’s liability. The suit cannot ask that the company pay more than the limit of liability provided, and the company cannot be added to an action brought against named insured.

LOSS CONDITIONS

Notice

The named insured is expected to take action once he or she becomes aware that an event has occurred that could result in a claim. This could be an occurrence or an offense, and it is not necessary that any injury has manifested at the time, but the potential exists. The named insured is expected to provide his or her employer and its insurance company and this insurance company with notice of the occurrence or offense.

The notice at this point is fairly simple but must include time, place, general information about the event, and why a claim is possible. Names and addresses of those involved plus those of potential witnesses are helpful.

Doing all of this at the time of the event provides an immediate record of the event so that when a claim is presented, the insurance company can immediately start the investigation.

Cooperation

The named insured does not get to file a claim and walk away. He or she is a very important part of the claim and, therefore, must cooperate with the insurance company throughout the claims process. 

Related Court Cases:

Agency Fails To Comply With General Liability and E&O Claim Notice Requirements

Insured Did Not Fail To Cooperate

Volunteer Payments

The named insured can pay whatever expenses or assume any obligations he or she chooses. Such action has no bearing on the insurance company. The only expenses or payments the insurance company will take are those which it has given written consent to the named insured to make. The only exception to this is any first aid that is given at the time the bodily injury occurs.

Related Court Case: Voluntary, Unauthorized Payments Ineligible As Damages

Legal Documents

Legal papers, notices, demands and other papers that are part of a suit are often delivered to the named insured even though the insurance company is handling the claim. When the named insured receives any of these, he or she must get those papers to the insurance company promptly.

Written Authorization

The insurance company is representing the named insured in a claim and therefore, must have access to information that is applicable to the claim. The named insured must provide written authorization for the insurance company to obtain such information that is permissible to be obtained by the insurance company.

Note: Certain items may not be accessible due to confidentiality rules such as HIPAA (Health Insurance Portability and Accountability Act of 1996), and the named insured not being able to provide such items cannot be used against the named insured as a breach of conditions.

Assisting the Insurance Company

The named insured is expected to assist the insurance company when it asks. There are five specific areas where assistance is particularly important and must be provided:

DEFINITIONS

Certain terms are defined in coverage forms and policies that insurance companies use for individual pharmacist professional liability insurance because of their specialized nature and relevance to this type of insurance.

Advertisement

This is any notice to the public announcing that the named insured’s goods, services, or products are available. The notice can be provided to anyone and can use any form of communication, including the Internet. A website is not considered an advertisement when it provides only information about the named insured. Only the pages of a website supporting sales activity are considered advertisement.

Bodily injury

Bodily harm, sickness, and disease. Death that is the result of bodily injury is covered whenever that death occurs. Mental or emotional distress or shock is bodily injury, but only if it is a result of a physical injury.

Compounding

The mixing of various items together to make a drug because of one or more of the following:

A compound can also be available as a commercial product but only when it is different from a drug available from other sources, or it is a drug that is needed immediately but is temporarily unavailable from other sources. It must be based on a prescription from a medical provider who has a relationship with a patient and the pharmacist.

Damages

Money given as compensation that is payable because of covered property damage, injury, or death. Some coverage forms and policies qualify this definition by using wording that denies coverage for punitive or exemplary damages or any other increase in damages that are not compensatory in nature.

It is important that the insurance company and the named insured both understand how the policy responds to awards that are broadly described as punitive damages.

Limit

The amount of coverage that applies. It is usually entered on the declarations and is explained in the Limit of Liability section.

Manufacturing

Producing drugs in a way that does not meet the definition of compounding. This policy does not provide coverage for manufacturing.

 

Example: A local physician asks Kerry to compound a drug for him. The compound is very popular, so she and the physician decide to manufacture the drug in order to sell it beyond the physician’s patients. The first phase, compounding, was covered. The second phase, manufacturing, is not covered.

Occurrence

This policy (and most other liability policies) defines this term as an accident. Continuous or repeated exposure to conditions that are similar is included in this definition.

 

Example: Greta made a mistake when she added pills to a bottle on her shelf. She filled 16 different prescriptions from that bottle before the accident was caught. The accident of putting the wrong pills in the bottle was the occurrence. All of the mistaken prescriptions were a continuous exposure to similar conditions. If all 16 customers present claims, they will be combined as a single occurrence with only one limit of liability available to pay losses.

Personal and advertising injury

Any of the following as well as any bodily injury that results from any of them:

Property Damage

Injury to tangible property. The injury must be physical and may include the property being totally destroyed. It does not include destruction of intellectual property, but it does include loss of use that occurs because the property is damaged. However, loss of use without such physical damage is excluded.

Pharmacy Services

Pharmacies provide many services besides filling prescriptions. As a result, this term is defined in order to limit the coverage this policy provides. Only losses related to these listed services are covered:

Note: The last item may actually be the only item needed because it is so inclusive.

Pharmacy services do not include the administration of drugs and devices for purposes that are only cosmetic in nature.

Suit

This term is not limited to only civil and administrative proceedings that occur because of bodily injury, property damage, or personal and adversity injury. It is also alternative dispute resolutions that the named insured is either required to participate in or participates with the written consent of the insurance carrier.

Terms

All parts of the policy. They include the insuring agreement, exclusions, conditions, provisions, and definitions but is not limited to just these.

An insurance policy is to be read as a complete document.

Underlying Insurance

Coverage available to cover the named insured’s professional liability. It includes an insurance policy, risk retention group, or self-insurance program that provides pharmacist’s professional liability held by the named insured, its employer, or any other entity. Retentions or deductibles in those policies or programs are also considered underlying insurance.

 

Example:

Scenario 1: Marcy works for Big Drug Store and makes a mistake in filling a prescription. She and Big Drug Store are sued. Big Drug Store’s insurance policy covers Marcy’s professional acts while she is working on its behalf. Big Drug Store’s insurance policy is underlying insurance for Marcy.

Example:

Scenario 2: Marcy volunteers for Helping Hands. She is sued for a pharmaceutical incident while acting on behalf of Helping Hands. Helping Hands’ underlying coverage does not include pharmaceutical incidents. As a result, it is not underlying insurance for Marcy.

We, us, or our

This is the insurance company that provides this coverage.

You or your

This is the named insured.

COVERAGE TRIGGER

Liability policies can be written on an occurrence basis or on a claims-made basis. Most professional liability insurance policies are written on a claims-made basis, and most commercial general liability policies are written on an occurrence basis. Individual pharmacist professional liability insurance policies are written on both bases, although more commonly on an occurrence basis than other professional coverages. One reason is because the underlying coverage for drug stores is usually written on an occurrence basis under commercial general liability coverage forms.

The basic difference between a claims-made policy and an occurrence policy is the determination of which policy responds to a loss. Under occurrence policies, the policy that responds is the one in effect when the bodily injury or property damage occurs or when the personal or advertising offense is committed. Under a claims-made policy, the policy that responds is the one in effect when the claim is made.

 

Example: Mary incorrectly fills a prescription on 05/01/20. John gets sick on 06/01/20. John demands indemnification from Mary on 10/01/20.

Scenario 1: On occurrence policies, the date that John becomes ill is the occurrence date. Mary’s occurrence policy in effect on that date responds. The date that John notifies Mary is irrelevant.

Scenario 2: On claims-made policies, the date that John notifies Mary is the claims-made date. Mary’s claims-made policy in effect on that date responds.

 

The Commercial General Liability part of PF&M explains other important considerations to review when comparing claims-made and occurrence policies.

Related Article: Compare: ISO Commercial General Liability Coverage Forms–CG 00 01 (Occurrence Basis) to CG 00 02 (Claims-Made Basis)

OPTIONAL COVERAGES

Individual pharmacists professional liability insurance policies may provide coverages beyond the primary coverage. Each pharmacist should carefully consider the coverage and how it relates to his or her particular role. Any decision should be reevaluated whenever there is a change in employment or volunteer service. Coverages that may be offered include the following: