Texas Medical Malpractice Insurance Requirements and Options

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If you're a medical professional in Texas, you need to understand the state's medical malpractice insurance requirements. Texas requires healthcare providers to have at least $250,000 in liability coverage per occurrence.

You can choose from various types of policies, including claims-made and occurrence-based policies. The main difference between these policies is when the policy covers the claim.

Understanding Texas Medical Malpractice Insurance

Licensed insurance companies in Texas regulate the policy forms and rates of medical liability insurers, and policies must contain legislatively mandated provisions, including no cancellation after 90 days and 90 days notice of nonrenewal or premium increase.

Texans obtaining malpractice insurance from licensed insurers are protected by the Texas Property and Casualty Insurance Guaranty Association, which covers up to $300,000 per claim if the carrier becomes insolvent.

Medical liability insurance covers a health care provider for errors arising from the medical practice, paying defense costs and generally covering claims for medical error or neglect, even if the claims are false or groundless.

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However, intentional and criminal acts are not covered, although some policies may pay defense costs until the nature of the underlying act is determined.

The Texas Medical Liability Insurance Underwriting Association (JUA) was established to insure physicians and other eligible health care providers who cannot obtain insurance in the voluntary market, and its member insurance companies and policyholders may be assessed to maintain solvency.

The Texas Medical Liability Trust (TMLT) is a statewide association of physicians or dentists that created a trust to self-insure its members, and only members of the founding association may obtain insurance from the TMLT.

Here are the key types of medical liability insurance providers in Texas:

Purchasing and Renewing Coverage

Start the renewal process early, ideally six months in advance, to assemble all necessary information.

Be sure to document all communication with your agent, especially key items such as policy limits, deductibles, and prior acts coverage.

If you use an agent, respond quickly to their requests for information to avoid delays.

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To be proactive, provide your agent or insurance markets with loss runs, coverage choices, and risk management efforts at least four months in advance.

Consider assuming more risk in the form of higher deductibles or lower policy limits, but first check with your hospitals and HMOs for their credentialing requirements.

Tail coverage is essential and can be expensive, costing as much as one and a half to three times an annual premium, so plan ahead.

Here are some key renewal process tips to keep in mind:

  • Start the renewal process early.
  • Respond quickly to agent requests for information.
  • Document all communication with your agent.
  • Provide loss runs, coverage choices, and risk management efforts at least four months in advance.

What Offers?

Legislatively created entities offer medical malpractice insurance in Texas, and they're worth considering as options for health care providers.

Four kinds of insurers may offer medical liability insurance to health care providers in Texas, including legislatively created entities.

Legislatively created entities also offer medical liability insurance, so it's worth exploring their options.

You may be a member of a group or employed at a hospital, in which case it's essential to ask questions and understand the details of the insurance policy provided to you.

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Legislatively created entities are one of the four kinds of insurers that may offer medical liability insurance in Texas.

If you change insurers, be sure to take measures to prevent coverage gaps, such as purchasing run-off ("tail") coverage from the old carrier or buying prior acts ("nose" or retroactive) coverage from the new one.

Renewing Coverage

Renewing coverage is a crucial process that requires some planning and preparation. It's essential to start the renewal process early, ideally six months in advance, to assemble all necessary information.

Your agent will need this information to make informed decisions, so be sure to respond quickly to their requests. Document all communication with your agent, including key items like policy limits, deductibles, and prior acts coverage.

Updating and documenting patient safety and loss control measures is also vital. This includes employee training and any measures you've implemented to reduce risk. Be prepared to show why your practice is a good risk and will continue to be so.

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Assuming more risk, such as higher deductibles or lower policy limits, may be an option to consider. However, check with your hospitals and HMOs first to ensure you meet their credentialing requirements.

To stay proactive, provide your agent or insurance markets with loss runs, coverage choices, and risk management efforts at least four months in advance. This will help them make informed decisions about your coverage.

Policy Types and Coverage

Medical malpractice insurance policies come in two basic forms: occurrence policy and claims-made policy. An occurrence policy provides lifetime coverage for liabilities arising from incidents that occur while the insurance was active.

The key difference between the two is that an occurrence policy covers claims regardless of when they're reported, while a claims-made policy only covers incidents that occurred and were reported while the insurance coverage was active.

If you choose a claims-made policy, you can specify an earlier retroactive date to cover incidents that occurred before the original effective date, or purchase a tail coverage to make the policy indefinite. Tail coverage is usually more expensive than an annual premium.

Here are the key features of each policy type:

Claims-Made vs Occurrence Policies

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Claims-made policies cover claims reported during the policy term if the event occurred after the effective date of the first policy issued.

This means that if you have a claims-made policy, you'll only be covered for incidents that occurred while the policy was active, and the claim was made during that time.

Claims-made policies can be more complex and require more attention than occurrence policies, but they are often cheaper for the first several years of coverage.

You can purchase a tail coverage to extend the policy's coverage beyond its expiration date, but this can be more expensive than an annual premium.

Alternatively, you can opt for nose coverage, which includes liability from a dropped claims-made policy in a new insurance policy.

Occurrence policies, on the other hand, provide ongoing coverage for events that occur during the policy period, even if they are reported after the policy is cancelled.

You don't need tail coverage with an occurrence policy, making it a simpler option.

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However, occurrence policies are often more expensive because they cover claims no matter when they are reported.

Claims-made policies may offer an attractive option for those looking to save money in the short term, but it's essential to weigh the pros and cons before making a decision.

A claims-made policy may specify a retroactive date to cover acts occurring before the original effective date, providing additional coverage for past incidents.

Types of Policies

There are two main types of medical malpractice insurance policies: occurrence policies and claims-made policies.

An occurrence policy provides lifetime coverage for liabilities arising from incidents that occur while the insurance was active, irrespective of when the claim is filed.

Claims-made policies cover only incidents that occurred and were reported while the insurance coverage was active.

To ensure that a claims-made policy covers incidents that occur even after the policy expires, the insurance holder can purchase a tail coverage to make the policy indefinite. Tail coverage is usually more expensive than an annual premium.

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Here are the key differences between occurrence and claims-made policies:

Occurrence policies offer a great deal of security, but they are usually more expensive. Claims-made policies are cheaper for the first several years of coverage, but they require more attention and are more complex.

Coverage Limits

Coverage limits are a crucial aspect of insurance policies, and understanding them is essential for making informed decisions.

Insurance companies typically don't dictate specific limits, so it's up to you to decide what's right for your practice. You can take cues from colleagues in your specialty and location to see what limits they carry.

Malpractice coverage has two key limits: the maximum per claim (each claim) and the maximum paid during the policy period (all claims). These limits vary depending on the policy and provider.

In Texas, tort reform has introduced liability limits on malpractice suits, which can affect the amount you may need to pay out. The state has a strict $250,000 limit on noneconomic damages in cases of medical malpractice per claimant.

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For institutions, the cap remains at $250,000 per facility, with a limit of $500,000 if the suit lists more than one health care institute. However, each facility will pay no more than $250,000 per claimant in noneconomic damages.

The total amount a claimant can receive has a $750,000 limit when combining rewards from all providers. This can be a significant factor in determining your policy limits.

What's Not Covered

Medical malpractice insurance is a vital protection for healthcare professionals, but it's not a catch-all solution. It doesn't cover liabilities arising from willful conduct, such as intentionally causing harm to a patient.

Liability for unlawful activities like sexual misconduct is also not covered. This includes any behavior that's considered a crime or a serious breach of medical ethics.

Medical malpractice insurance typically doesn't cover hospital administrative mistakes either. These are errors made by hospital staff in managing patient records or other administrative tasks.

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It's also worth noting that medical malpractice insurance usually doesn't cover liabilities arising from operating under the influence of drugs or alcohol. This is a serious issue that can put patients' lives at risk.

Cyber security issues are another area where medical malpractice insurance often falls short. It doesn't cover liabilities from cyberattacks or data breaches involving personal medical records.

Is Required?

In Texas, medical malpractice insurance is not required for physicians or healthcare practitioners to work.

Texas is one of many states that don't require malpractice insurance, thanks to the Texas Torts Law reform in 2003, which limited liability for healthcare workers.

Having malpractice insurance can protect physicians from losing a large sum of money in medical malpractice claims, including awards, settlements, and attorney fees.

Despite reforms, medical malpractice claims can still be costly and time-consuming for all parties involved, including healthcare practitioners.

Claims and Risk Management

Medical malpractice insurance in Texas can be complex, but it's essential to understand the process of filing a claim.

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In Texas, the average cost of a medical malpractice claim is around $150,000.

Filing a claim can be a lengthy process, taking up to 18 months to resolve, as seen in the case of a 2018 Texas Supreme Court decision.

It's crucial to have a solid risk management plan in place to minimize the likelihood of a claim being filed.

By having a thorough understanding of the Texas Medical Liability Act, healthcare professionals can better navigate the claims process and reduce their risk exposure.

Carry Requirements

In Texas, you're not required by law to carry malpractice insurance to work as a physician or healthcare provider. However, hospitals and other facilities may have their own requirements.

Some states don't require malpractice insurance, but having it can save a physician from losing a significant amount of money from a lawsuit.

Claims in Texas have dropped significantly since the 2003 tort reform, with payouts falling by 22 percent from 2003 to 2011.

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The number of claims in Texas decreased by two-thirds over the same period.

This decline in claims has led to a reduction in large lawsuit payouts, making it a more favorable environment for businesses and individuals.

The number of physicians in Texas has increased, growing by 10,354 more than population growth would account for between 2003 and 2016.

This growth in physicians is a notable shift from the past, when the state licensed the fewest number of doctors in the decade leading up to reform in 2001.

Premiums for Texas physicians and lawsuits have both dropped by almost 50 percent throughout the state from 2003 to 2016.

This reduction in premiums has likely contributed to the increased attractiveness of the state for medical professionals and businesses.

Statute of Limitations

The statute of limitations in Texas for medical malpractice is two years from the date of discovery of the incident. However, this two-year limit doesn't always apply, especially in cases involving minors.

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In Texas, any minor under age 12 has until their 14th birthday to have a claim filed on their behalf. But, a court ruling in Adams vs. Gottwald declared this portion of the statue unconstitutional.

There's also a statute of repose, which considers claims expired after 10 years from the event. This means if a claimant didn't discover the cause for the suit until 10 years after the fact, they can't file a lawsuit.

Physicians in Texas need to be prepared for incidents from years past to resurface in malpractice cases. To avoid serious financial problems, all providers should carry malpractice insurance.

Who Pays?

In Texas, medical malpractice insurance can be funded either by an employer or by the practitioners themselves. Each option has its pros and cons.

Employers usually create group plans that practitioners can be added or removed from based on their employment status. These plans typically contain each worker's effective and retroactive dates if it's a claims-made policy.

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One major advantage of employer-sponsored plans is that workers don't have to worry about shopping for and maintaining coverage. However, this kind of insurance does not provide as much flexibility and freedom.

Practitioners may have to pay for their tail or nose coverage, depending on their employment contract. For example, an employment contract may stipulate that a physician is responsible for their tail coverage if they quit without cause or are fired for a legitimate reason.

Health workers can have a personal medical liability insurance policy tailored to their professional needs, which offers them more flexibility. However, they are responsible for shopping for their plans and ensuring that their policy does not lapse.

Self-insurance allows practitioners to work at multiple locations rather than only working for the facility that offers them a group plan.

Insurance Companies and Rates

Insurance companies serving Texas offer a range of malpractice insurance options. Most people can't get the best rates on their own, so it's helpful to have an advisor like Gallagher to guide you.

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In Texas, malpractice insurance rates depend on specialty and county. Your prior history with malpractice claims will also affect your rates. Some physicians may want to carry more than the minimum amount of coverage.

Insurance rates vary greatly by specialty, with high-risk specialties like surgery having higher rates than lower-risk areas.

Companies

In Texas, you have several options for malpractice insurance companies. Licensed insurance companies, such as those regulated by the Texas Department of Insurance (TDI), offer policies with legislatively mandated provisions, including a 90-day notice period for cancellation, nonrenewal, or premium increases.

These licensed insurers are also protected by the Texas Property and Casualty Insurance Guaranty Association, which covers up to $300,000 per claim if the carrier becomes insolvent.

The Texas Medical Liability Insurance Underwriting Association (JUA) is another option for physicians and healthcare providers who can't get insurance in the voluntary market. It was established by the Legislature in 1975 and is regulated by TDI.

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The Texas Medical Liability Trust (TMLT) is a self-insurance trust formed by the Texas Medical Association in 1978. It files its rates and policy forms with TDI for information purposes only and doesn't participate in the guaranty association.

Here are the main types of malpractice insurance companies in Texas:

  • Licensed insurance companies
  • Texas Medical Liability Insurance Underwriting Association (JUA)
  • Texas Medical Liability Trust (TMLT)

Rate Information

Insurance rates for malpractice coverage depend on specialty and county. Your prior history with malpractice claims will also affect your rates.

Physicians in high-risk specialties, such as surgeons, have higher rates than doctors in lower-risk areas. Prices vary based on your claim history and location in addition to your specialty.

The rate range for medical malpractice premium rates varies greatly by specialty. This is evident in the top 20 specialties in Texas, where rates differ significantly.

To get a more specific quote for your malpractice insurance, it's essential to talk to an insurance expert. They can provide you with the most accurate information based on your individual circumstances.

TMLT and Partnership

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Partnering with TMLT (Texas Medical Liability Trust) can be a smart move for Texas physicians, but it's worth considering Gallagher as an alternative. They're the largest provider of malpractice liability insurance to physicians in Texas.

Gallagher's extensive network with major insurers allows them to broker the best terms possible for physicians. You'll work with a real expert in Texas malpractice coverage, not a computer.

Partner with Gallagher

Partnering with Gallagher can give you access to the largest provider of malpractice liability insurance to physicians in Texas. They have connections with major insurers, allowing them to broker the best terms possible for physicians.

You'll be working with a real expert in Texas malpractice coverage, not just a computer. Gallagher gets commissions from insurers, but these commissions are already part of the rates they charge.

Without Gallagher's assistance, you'll be at a disadvantage trying to negotiate your malpractice coverage on your own. They have the knowledge and connections to get you the best rates.

The Gallagher family is among the top ethical insurance brokers in the United States. They can help with malpractice insurance coverage, as well as other coverage needs like general business insurance and employee benefits.

With TMLT Policies

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With TMLT policies, you get a partner who shares your commitment to practicing safe medicine. A team of risk management professionals will help mitigate risk with a customized approach.

Customized risk management services include CME courses, on-site practice reviews, and telephone and email consultations. These services are designed to help you avoid major expenses, lawsuits, business interruptions, and regulatory fines and penalties.

TMLT's risk management services are a key benefit of partnering with them. By working with TMLT, you'll have access to a team of experts who can help you navigate the complex world of medical malpractice insurance.

Here are some of the key benefits of TMLT's risk management services:

  • CME courses to help you stay up-to-date on the latest medical best practices
  • On-site practice reviews to identify potential risks and areas for improvement
  • Telephone and email consultations to provide guidance and support

In addition to customized risk management services, TMLT policies also provide coverage for data breaches and privacy liability actions. This means that if your practice is affected by a data breach, you'll be protected from major expenses, lawsuits, business interruptions, and regulatory fines and penalties.

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TMLT also offers employment practices liability insurance, which protects against employment-related claims such as harassment, wrongful termination, and discrimination. This is an important benefit for physicians who serve in an administrative capacity.

Finally, TMLT's medefense coverage protects physicians who are subject to disciplinary actions, such as actions by the Texas Medical Board, a hospital review committee, or a federal regulatory agency. This coverage includes legal expenses, fines, and penalties associated with these actions.

Frequently Asked Questions

What does $1 m /$ 3m mean?

Policy payout: $1m covers each claim, while $3m is the total annual coverage

Kellie Hessel

Junior Writer

Kellie Hessel is a rising star in the world of journalism, with a passion for uncovering the stories that shape our world. With a keen eye for detail and a knack for storytelling, Kellie has established herself as a go-to writer for industry insights and expert analysis. Kellie's areas of expertise include the insurance industry, where she has developed a deep understanding of the complex issues and trends that impact businesses and individuals alike.

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