Federal Employee Professional Liability Insurance
Many of our clients are federal employees. Work-related publications like Federal Times and Government Executive, plus federal union publications all tout the need for professional liability insurance. Of course, the providers of such coverage tend to write the most articles extolling the benefits of this type of coverage and the dangers of “going bare”. I may be a little cynical of this phenomenon.
Now I’m no attorney, nor an insurance agent, but I am an advisor to and, observer of, federal workers. Part of our role as a financial planner, is risk management, the area where we calculate the damage that can be inflicted upon a client’s assets and income streams like pensions and social security benefits. Risk management also involves tools to mitigate or eliminate financial damage to our client’s financial resources. Life insurance is a perfect example when unexpected death at a young age can expose federal worker survivors to years of poverty because of minimal or lack of life insurance coverage in case of premature death.
But what about the risk of being sued? Federal law as I understand it, requires the worker’s agency to ask for the Department of Justice to intervene on behalf of the worker if it is determined the worker was functioning within the scope of their duties.
How often is a federal worker sued for activities outside the scope of their duties? A lot of equal opportunity cases might fit the definition of outside the scope. It seems there might be enough cases “outside the scope” happening to justify purchasing professional liability insurance, or so it seems from all the articles I’ve read highlighting this risk. Accurate numbers of cases are not easily obtained.
In fact, federal law also authorized payment of half of the cost of professional liability insurance for “qualified” employees. Qualified employees are usually managers and supervisors. I’m thinking each agency determines who is qualified for such reimbursement. If the government is encouraging purchase by partial reimbursement, then the government must believe additional coverage may be required by federal workers.
Now in researching information for this article, I found reference to policies also include the exact same wording about coverage for “duties within the scope of employment of the insured member” as does the federal law. So what coverage are you purchasing that exceeds the federal law that covers federal workers?
Providers of these federal employee professional liability policies list many situations where they provide coverage and or reimbursement of insured policyholders expenses in defending themselves. It seemed to me that coverage did extend in some cases beyond the duties and scope criteria given the testimonials and examples that were presented in their promotional materials.
So, what’s a federal worker to do? 1. Review the proposed policy before you sign up for coverage. 2. Review, if possible, the claims paying ability of the insurance company by one or more rating agency. 3. Find out if you qualify for partial reimbursement. 4. Think about continuing or eliminating coverage at least once a year.
Bottom line: In this current federal work environment, professional liability coverage may be a needed expense for peace of mind, if nothing else.