The Facts About Claims-Based Versus Occurrence-Based Counselor Insurance

Counselor insurance is critical for covering the defense costs resulting from claims filed against both public and private practices. While claims coverage is the most common form of counselor insurance, it is limited to claims filed only while the insurance is active, which makes the renewal of policies necessary even after practice has been discontinued. Occurrence-based coverage is recommended as a more secure insurance policy, as coverage is based on the time of the occurrence rather than the time of the claim. However, the cost of occurrence-based policies can be considerably higher than other forms of Counselor Insurance, which can make it unaffordable for many new or small counseling practices.

The counseling profession focuses on the overall well being of patients, and it can include both medical and non-medical treatment plans. Injuries resulting from the inaccurate advice of a counselor are as likely to occur as adverse health effects due to incorrectly prescribed medications, which makes the risk of claim being filed exceptionally high. The financial devastation that can result from even a single lawsuit has made counselor insurance particularly critical for all levels of both public and private practices. Counselor insurance can be purchased with coverage that is either claims-based or occurrence-based. Claims-based coverage is by far the most common type of insurance selected by practicing professionals, as this is the less expensive of the two. However, claims-based coverage limits protection to only those claims filed while the insurance is in effect. This means that claims made after a policy has expired will not be protected by insurance, regardless of whether the insurance was in place when the incident resulting in the claim actually happened.

Claims-based Counselor Insurance does allow the purchase of a tail in lieu of a renewal, however, which can continue insurance coverage even after a counselor has discontinued professional practice. Tails are the name given to a one-time fee paid to extend coverage over a designated length of time, with the amount of the fee dependent upon the selected time. The option to purchase unlimited tails that extend throughout the life of a retired counselor is available, although the cost can be considerably more than those purchased for a set period of time, often as much as 175% of the most recent annual premium.

Occurrence-based counselor insurance, on the other hand, offers a more secure type of coverage protection, as coverage will apply as long as the insurance was active at the time that the incident resulting in the claim occurred. Coverage will also remain if effect after the policy has expired, which can make renewals unnecessary. The cost of these policies are a significant drawback, however, with the annual premium often being beyond what new, small, or private practices can reasonably afford.

Counselor insurance is a critical part of any counseling practice, as the ability to prescribe both medical and non-medical treatments makes the risk a claim very high. Claims-based coverage is often the most commonly chosen policy, although coverage is limited to only those claims filed while the policy is active. Occurrence-based coverage offers a more secure protection, as coverage need only be active when the incident occurred to be effectively covered, although the significantly higher premiums can often make this unaffordable. Claims can be filed for any number of reasons, and the financial consequences can be significant, which makes counselor insurance one of the most important parts of any counseling practice.





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