Medical Malpractice Insurance

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Medical Malpractice 101

Medical Malpractice Insurance (also called Medical Professional Liability Insurance) is a type of errors and omissions (E&O) coverage that us usually purchased as a standalone policy. It protects healthcare professionals against claims alleging their negligent acts caused injury to patients. Medical malpractice insurance is essential for anyone else who provides healthcare services.

Medical Malpractice Is Usually Claims-Made

Most medical malpractice coverages are written on claims-made forms. A claims-made policy covers claims brought against the insured healthcare professional during the policy period. Claims brought after the policy has expired aren’t covered unless tail coverage was purchased (explained below). Most policies include a retroactive date. To be covered, claims must arise from acts you committed on or after the retroactive date. Claims arising from acts you committed before that date aren’t covered.

Some medical malpractices coverages are available on occurrence policies. An occurrence policy covers claims arising from acts committed during the policy period no matter when the claim is filed. Claims made many years after the policy has expired may be covered if they result from acts committed while the policy was in effect.

What’s Covered In Most Medical Malpractice Policies

Like other insurance contracts, malpractice policies contain an Insuring Agreement that describes the coverage in broad terms. It often begins with the words “we will pay.” The coverage afforded by the insuring agreement is refined and narrowed by the policy’s exclusions, conditions, and definitions.

While the specific wording may vary, a medical malpractice policy typically covers damages the insured is legally obligated to pay because of a medical incident for which a claim is made during the policy period. The insuring agreement usually contains terms like “medical incident” or “professional incident” that are defined in the policy Definitions section. It is important to understand the meanings of these terms because they determine the scope of coverage afforded by the policy.

For instance, suppose that you are a physician. You are insured under a professional liability policy that covers damages arising from a “professional incident.” This term is defined as any act, error or omission committed by you in the providing or failure to provide nursing services. Clearly, the policy isn’t suited to your activities as a physician because it is designed for nurses.

Some medical malpractice policies cover your Vicarious Liability for acts committed by other people. This coverage is essential if you employ workers or hire medical practitioners that are independent contractors. As the employer of such individuals, you may be liable for errors they make that cause injury to patients.

What To Look For When Shopping For Medical Malpractice Policies

Exclusions: Malpractice policies contain many exclusions. Here are some you should be aware of:

• Acts committed while you are under the influence of drugs or alcohol
• Dishonest, fraudulent, criminal or illegal acts
• Claims arising out of certain types of procedures
• Claims arising from your unauthorized disclosure of patients’ medical records

Defense and Settlement: Most malpractice policies cover the cost of defending you against covered claims. Policies cover costs incurred by an attorney assigned to your case by the insurer. They do not cover costs incurred by a lawyer you hire yourself. Depending on the policy, defense costs may be included in the limit that applies to damages (Defense Inside the Limits) or covered in addition to the limit (Defense Outside of Limits). Defense costs add up quickly so it’s in your best interests to find a policy that covers defense outside the limit.

Some malpractice policies allow the insurer to settle any claim or suit as it sees fit, whether you agree with the settlement or not. Others state that they will not settle a claim without your consent. Note that consent-to-settle clauses are often subject to restrictions. Many state that if you refuse to accept a settlement that is agreeable to the plaintiff, the insurer will pay no more than the amount of the proposed settlement plus defense costs incurred up to the date of your refusal.

Limits: Medical malpractice policies generally include two limits, an aggregate (annual) limit and an individual limit. Depending on the policy, the latter may apply to each claim or each event. When choosing a limit, consider your specialty and location. Malpractice claims are more prevalent in some branches of medicine than others and some states are more litigious than others.

Extended Reporting Period (Tail): Claims-made policies don’t cover claims brought against you after the policy has expired. This can be a problem if your policy has been canceled, non-renewed or replaced by an occurrence policy. Fortunately, you can buy coverage for such claims by purchasing an extended reporting period (also called tail coverage). A Tail provides extra time to report claims resulting from acts committed before the policy has expired. It does not cover claims resulting from acts committed after the policy has ended.

The time period provided is typically between one and five years but may be longer. Some insurers offer free and/or unlimited tail coverage.

For more information, go to the National Institutes of Health

Lastly, make sure to check an insurer’s financial rating before you buy a policy. If the insurance company is an Admitted Carrier in the State of your operations, you are provided some protection by that State’s Insurance “Guarantee Fund” should that carrier become insolvent. Non-Admitted Carriers are not regulated by that State’s Dept of Insurance however they may be the only carrier willing to provide coverage in certain situations.

For a Medical Malpractice Quote, click here:  Get Quote

Or contact Jerrod Lottinger at 619.814.3063 or Jerrod@EhrenfeldInsurance.com