1. Forms
2. PR
3. PR-03-03

What the form is

This endorsement, PR 03 03, is designed to be added to specific professional liability insurance policies to introduce a deductible. Its primary function is to stipulate that the insured party will bear a predetermined amount of financial responsibility for each covered 'Optometric Incident' before the insurance policy responds to the claim. The insurer then covers the portion of the loss that exceeds this deductible amount, up to the policy limits.

Classes of business it applies to

The PR 03 03 endorsement is specifically tailored for healthcare professionals in the field of optometry. It is used with professional liability (malpractice) insurance for:

• Individual optometrists
• Optometry practices or clinics

For example, if an optometry clinic has a PR 00 11 (Optometrists Professional Liability Coverage Form - Claims-Made) or PR 00 12 (Optometrists Professional Liability Coverage Form - Occurrence) policy, the PR 03 03 endorsement would be attached to specify a deductible amount, say $2,500, that the clinic would pay for each malpractice claim related to an optometric incident before the insurer covers the rest.

Special considerations

Several important points should be considered when using this endorsement:

• Mandatory Deductible: Once attached, the deductible becomes a compulsory part of the coverage for optometric incidents.
• Per Incident Basis: The deductible typically applies to each individual 'Optometric Incident,' as defined in the policy. It's crucial to understand this definition.
• Impact on Premiums: Opting for a deductible generally lowers the insurance premium, as the insured takes on a share of the initial risk.
• Defense Costs: Policy terms will dictate whether defense costs are included within the deductible amount or are covered by the insurer in addition to the deductible. This should be clarified.
• Distinction from other forms: This form is specific to optometric incidents. Other forms in the PR 03 series, such as PR 03 02 (for medical incidents) or PR 03 04 (for veterinary incidents), apply to different healthcare professions and their respective incident types.

For instance, if an optometrist faces multiple unrelated claims in a policy period, the deductible would apply to each separate incident.

Key information for agents and underwriters

• Pricing Adjustments: The selected deductible level directly influences the premium calculation. Agents should present options to clients, explaining the risk-reward balance.
• Risk Appetite Assessment: An underwriter might view an insured's willingness to accept a higher deductible as an indicator of good risk management practices or financial stability. Conversely, a very low deductible might be sought by those with lower risk tolerance or cash flow concerns.
• Clarity for Insureds: Agents must clearly explain to optometrists how the deductible works, especially regarding when and how it's paid, and its application to claim expenses versus indemnity.
• Underwriting Consistency: Underwriters must ensure that the PR 03 03 is used in conjunction with the appropriate base professional liability forms (PR 00 11 or PR 00 12) and that the term 'Optometric Incident' is consistently applied. They should also verify if the state has any specific regulations concerning deductibles in professional liability insurance for optometrists.
• Aggregate Limits: It's important to note how the deductible interacts with any aggregate limit on the policy, though this endorsement primarily focuses on the per-incident deductible.