Process Server Risk Management: Bonding vs. Insurance “PART 2”
The following answers to frequently asked questions illuminate exactly how General Liability and E&O Insurance work to protect the personal assets of Process Servers and Process Service Agencies alike.
Do I need insurance if I have a bond?
Yes, you need insurance precisely because you do have a bond. A bond is a form of consumer protection; it protects those harmed by your actions, but it does not protect you. If a claim is paid out of your bond, your surety company will come after you for reimbursement.
However, if you have E&O Insurance, your insurance will reimburse the surety company for any claims paid on the bond resulting from the unintentional error or omission. E&O Insurance is true protection for the Process Server.
How much E&O Insurance do I need?
The answer to this question is based on each individual Server’s personal situation and assessment of personal risk. Other factors to be considered when determining how much insurance you need are how often and what types of documents you serve.
Generally speaking, E&O policy limits that provide increased protection are available at very affordable rates.
When do I pay the premium for E&O Insurance?
Yes. Most Carriers will require 25% of the pure premium, along with all tax and fee as a down payment; which is typically non-refundable. The balance can be financed over a period of up to 10 months at reasonable interest rates.
Will E&O Insurance cover me when I’m no longer a Process Server?
Yes, if you had an OCCURRENCE form policy in force at the time you committed the error or omission, then your policy will cover you even if you are no longer a Server or have terminated your insurance policy, provided the action against your policy is commenced within the applicable statute of limitations period.
Some E&O policies offered are on a “claims-made” form. This means that in order to remain covered, you must continue to purchase and hold insurance, paying for a “tail” policy well after the time you are no longer serving civil process. The minute you terminate your policy, you are no longer covered even if you had a policy at the time the act or omission was committed. The Author does NOT typically recommend Claims-Made insurance policies for Process Servers.
Are defense costs covered inside or outside of the policy limit?
With most E&O Insurance policies, defense costs are covered inside of the policy limit. This means that the total sum the insurer will cover is the stated policy limit. So, if you have a $25,000 policy, $25,000 is the most the insurer will pay for all losses related to the claim or all claims.
Is there a deductible to pay before my E&O policy kicks in?
Possibly, dependent upon the policy purchased. I write a policy that does not have any deductible requirement; meaning unlike car insurance, there is no deductible that must be satisfied before insurance pays on a claim. Unlike medical insurance, there are no co-pays to cover. The only payment you make is the policy premium to activate the policy at the beginning of the policy term.
Purchasing E&O Insurance is an important safety measure that protects you from a mistake or an outright false claim; and choosing the right coverage is the most important step. If you have questions or want more options, please give us a call at 1-855-356-0875 x1008 – H. Eric Vennes