What is Medical Malpractice liability insurance?

Medical Professional Liability Insurance (or Malpractice Insurance) covers individuals and companies for actual or alleged negligence in the performance of professional duties. The coverage provides for medical expenses, bodily injury, property damage and personal injury.

I know I need Professional Liability but what is General Liability, and do I need it?

General liability provides coverage for the day to day operations of an entity.  This would include any bodily injuries (like a slip-and-fall on the premises), property damage (losing dentures, glasses) and advertising injuries (going to social media to libel a fellow physician).  Every entity needs this protection.

What is Claims-Made versus Occurrence coverage?

An occurrence policy is the most common type of insurance policy. With an occurrence policy, any incident, or alleged incident, that occurs during that policy period will be covered, regardless of how many years later it is reported.

Advantage to occurrence policies:

  • There is no need to purchase a reporting endorsement (or tail coverage).

A claims-made policy provides a different reporting trigger than most insuring agreements. The trigger is when the claim is made as opposed to when the incident occurred. This trigger is common to professional liability policies where the time from the alleged incident to when the claim is reported can be several months or years.  Advantages to claims-made policies include:

  • Lower premium prices (especially in the first years of the policy).
  • Ability to keep limits up-to-date. A claims-made policy can raise limits to keep abreast of inflation and trends in claim awards and settlements.  Whereas an occurrence policy’s limits will remain what they were at the time of the incident, even if the old limits are inadequate currently.
  • There is no need to track which carrier to make a claim to or worry that a former carrier is in financial difficulty and unable to live up to the requirements of the policy.

What’s the difference between an Admitted Carrier and a Non-Admitted Carrier?

An insurance company that is “non-admitted” has not been approved by the state’s insurance department. This means that…

  • The insurance company does not necessarily comply with state insurance regulations.
  • If the insurance company becomes insolvent, there is no guarantee that your claims will be paid, even if your case is active at the time of the bankruptcy or financial failure.
  • If a policyholder thinks his or her case was handled improperly, he or she cannot appeal to the state insurance department.

If the carrier is admitted it has been approved by the state’s insurance department and is subject to the guarantee fund so if the insurance company goes out of business claims will be handled by the state.

There are situations where an admitted carrier is not willing to provide coverage for your business, for reason such as an unfavorable claims history, or the risk is too unique for the appetite of admitted carriers.  Non-admitted carriers then step in to provide coverage options.

What is a ‘Tail’ or a Reporting Endorsement?

A tail or reporting endorsement is a component of claims made coverage.   When a claims-made policy is canceled (for example a covered employee leaves a business, or that business closes) there is no longer a policy in place to respond to incidents that happened while the policy was in place.

A purchased extended reporting endorsement will extend coverage for the period that the policy was in place after the policy has been canceled.  This can either be for a finite or infinite amount of time, depending on the offerings from the carrier at the time the policy is bound.

I bought a Claims-Made policy last year and the price is increasing significantly the second year, why?

A claims-made policy doesn’t provide any coverage for any claims that happened prior to the start of the policy (known as the retroactive date).  Since there’s less exposure the premium is discounted.  Each year the exposure to the carrier grows because the coverage is always extending back to the retroactive date.  For this reason, the premiums will rise, typically for the first five years of the policy, until the ‘mature rate’ is reached. Once the mature rate is reached, pricing remains the same unless there is a rate increase or decrease.

What are defense costs inside the limits versus outside?

With any malpractice policy you are getting coverage for damages and defense costs.  Some policies offer the defense cost inside the limits.  This means the defense cost come from the same set of limits that the damages come from and are exhausted once the limits are reached.  Other polices offer defense outside of the limits, meaning any defense costs will not erode the limits of the policy.

How long will it take for me to secure coverage?

It depends.  An individual provider can secure coverage fast if they have a signed and completed application, as well as supporting documents such as loss histories and a CV.   Larger businesses often have a longer time frame since the risk is more complex, there may be multiple lines of coverage to consider and insurance companies may require risk management inspections.

What limits should I purchase?

There’s no one size that fits all. A lot depends on the exposures the applicant has and the assets at risk.  J&R Agency can discuss with you what will be required and then depending on your tolerance for risk we can come up with options for you to evaluate.

When should I report a claim?

In malpractice the sooner the better.  If you get a threatening letter, visit from a patient, phone call you need to report it to your insurance company.  If there is an event that you believe could potentially lead to a claim, it is best practice to report this as well.  This helps the insurance company get in front of claim.  Also, most carriers have a condition that requires the insured to notify the insurance company as soon as reasonably possible.