Understanding Malpractice Insurance Companies and Their Policies

Malpractice insurance companies play a crucial role in protecting healthcare professionals from financial ruin in the event of a lawsuit.

Their policies vary in terms of coverage limits, deductibles, and premium costs.

Some insurance companies offer tail coverage, which covers claims that arise after the policyholder has retired or stopped practicing medicine.

It's essential to carefully review policy details to ensure you understand what's covered and what's not.

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There are two basic forms of professional liability insurance: occurrence and claims-made policies. Occurrence policies provide lifetime coverage for incidents that occurred while the policy was in effect, regardless of when the claim is filed.

Claims-made policies, on the other hand, provide coverage only for incidents that occurred and were reported while you are insured with that carrier. This means that both the incident and the filing of the claim must happen while the policy is in effect.

Claims-made policies are cheaper than occurrence policies for the first several years of coverage, but the premium can increase significantly after the first year.

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There are two basic forms of professional liability insurance: occurrence and claims-made policies. Most policies available in the market today are claims-made, but some companies still offer occurrence policies.

A claims-made policy only covers claims if the policy was in effect when the treatment occurred and when the lawsuit was made. This means that if you switch to a new insurance provider, you may not be covered for claims that arose during the time you had the previous policy.

On the other hand, an occurrence policy covers any claim that was made on a treatment that occurred while the policy was in effect, even if the policy has since expired. This type of policy provides more comprehensive coverage, but it can be more expensive.

It's worth noting that some states have caps on damages that can be awarded, so you may not need high limits of coverage. For example, in California, Florida, and Texas, there are limits on the amount of damages that can be awarded in a lawsuit.

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There are two types of liability offered by insurance companies: direct liability and vicarious liability. Direct liability covers you for the services you personally provide.

Direct liability is a crucial aspect of professional liability insurance, as it protects you from claims related to your own actions. For example, if you're a healthcare professional and a patient sues you for malpractice, direct liability coverage would help cover the costs of defending yourself in court.

Vicarious liability, on the other hand, covers people for whom you may be legally liable if you're providing supervision and direction. This could include employees, students, or volunteers. If someone under your supervision causes harm to a patient, vicarious liability coverage would help protect you from potential lawsuits.

Here's a breakdown of the two types of liability:

It's essential to understand the difference between these two types of liability to ensure you're properly protected in case of a lawsuit. By choosing the right type of liability coverage, you can feel more confident in your professional practice.

Malpractice insurance can be obtained through various channels. You can purchase it through a private insurer, your employer, or organizations like medical risk retention groups (RRGs).

Malpractice insurance covers legal costs, punitive damages, and medical damages. This comprehensive coverage allows healthcare professionals to focus on their patients.

The two basic types of professional liability insurance are claims-made policies and occurrence policies. Understanding the difference between these types is crucial when selecting a policy.

Malpractice insurance is a type of professional liability insurance intended to cover healthcare professionals. This insurance is designed to protect against lawsuits filed by patients seeking damages for medical negligence.

Here are the ways to obtain malpractice insurance:

Insurance companies can't tell you what limits to carry, so it's up to you to research what's typical in your specialty and location.

You can speak with colleagues to see what limits they carry, or consult with your financial advisor or insurance agent for recommendations based on your financial situation.

Limits of coverage spell out the maximum amount your policy will pay, with two limits: the maximum per claim and the maximum paid during the policy period.

Most policies offer limits of coverage ranging from $100,000 to $300,000 and $1 million to $3 million, with the first number being the maximum amount the insurance company will pay per claim during the policy period.

Anderson notes that limits are something to look for in a policy, especially for an oncologist just starting practice, and advises having limits that are what everyone else has in your geographical area and specialty.

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An occurrence policy provides protection for covered medical professional liability claims that occur during the policy period.

Occurrence coverage is a type of policy that provides lifetime coverage for incidents that occurred while the policy was in effect, regardless of when the claim is filed. This means that if you have an occurrence-type policy in effect for a year and a patient files a claim the following year for an incident that happened during that year, the policy covers you for that claim.

For another approach, see: Prior Acts Coverage Malpractice Insurance

One benefit of occurrence policies is that you don't need tail coverage with them, which can be a significant cost savings. Tail coverage is not necessary because occurrence policies provide ongoing coverage for events that occur during the policy period, even if they are reported after the policy is cancelled.

Claims-made policies are generally cheaper than occurrence policies for the first several years of coverage, but the premium for occurrence policies is often more stable in the long run. The first-year premium of a claims-made policy may be very inexpensive, but it then increases each year for a period of 3 to 5 years until it reaches the mature rate.

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You may need additional coverages depending on your particular exposure, such as general liability for premises or damage to property of others.

TMLT policies come with a range of built-in coverages that can help protect your practice. Customized risk management services are available, including CME courses, on-site practice reviews, and telephone and email consultations.

Employment practices liability insurance (EPLI) is also included, which protects against employment-related claims such as harassment, wrongful termination, and discrimination.

Data breaches and privacy liability actions are covered, protecting your practice from major expenses, lawsuits, business interruptions, and regulatory fines and penalties.

Medefense coverage is also available, covering legal expenses, fines, and penalties associated with disciplinary actions, such as actions by the Texas Medical Board, a hospital review committee, or a federal regulatory agency.

Medical director coverage is included for physicians who are also serving in an administrative capacity as head of an organized medical staff.

Here are some of the additional coverages available:

Insurance companies can't tell you what limits to carry, but you can ask colleagues in your specialty and location what limits they have. Many insurance companies offer limits of coverage ranging from $100,000 to $300,000 and $1 million to $3 million.

Anderson advises that limits for an oncologist just starting practice should be similar to what everyone else has. Having higher limits may help you sleep better, but it means you'll be the deep pocket in a lawsuit naming other defendants.

In some states, like California, Florida, and Texas, there are caps on damages that can be awarded, so you may not need as high limits. If you're a practice owner or shareholder, verify that the coverage applies to your professional corporation and employees.

Policy coverage specifies what incidents are covered, so be sure it covers your full scope of clinical activities. Some policies include insurance for locum tenens coverage, which can be useful for solo or small practices.