Which Type of Medical Malpractice Policy is Right for You?

Sorry folks, I didn't intend for this to turn into malpractice week here at MidlevelU.  Monday afternoon I plopped down in the chair on my front porch to enjoy the sunshine (finally) and hash out a short post on medical malpractice tail coverage (coming soon...).  As I began doing a little research for the post I discovered malpractice is not an easy topic to cover.  So, I stepped back to square one writing Medical Malpractice Insurance 101.

Although talking about malpractice insurance is quite frankly a little boring, I think many nurse practitioners, including myself, have a gap in knowledge when it comes to the subject.  No one likes to think about getting sued, or seemingly worse, wading through piles and piles of paperwork during the process of signing an employment contract.  Most of us accept the insurance plan our employer offers without a second thought.  I know I do.  As a follow up to our Medical Malpractice 101 discussion, today I want to talk about different types of malpractice insurance.  Then, maybe tomorrow, I can finally get to my post on tail coverage!

Occurrence-Made Malpractice Policies

Occurrence malpractice insurance policies offer coverage to medical providers for events occurring during the period when the provider holds the policy regardless of the length of time that has passed before a claim is filed.  For example, if you treated a patient in 1992 and were insured by Company A with an occurrence-made policy and this patient filed a lawsuit against you in 2014, Company A would still be responsible for covering you for this incident.  Even if you have changed jobs, quit practicing or are currently insured by another carrier, an occurrence-made policy offers coverage for any event that occurred when you held the policy.

Occurrence-made policies offer the broadest form of malpractice coverage, but are rare as they pose a greater risk to insurance companies.  Since many malpractice claims are reported years after the alleged event occurred, occurrence-made policies place the insurance carrier at financial risk because it makes it difficult to estimate the eventual number and cost of claims.  Because these policies are risky for insurance companies and offer such broad coverage, they are very expensive.

Claims-Made Malpractice Policies

Claims-made policies are the most common type of medical malpractice insurance.  They cover policy holders for events that take place and are reported during the time the medical provider holds the policy.  For example, consider a medical provider who is insured with a Company A for five years and stops paying insurance premiums effectively ending his/her coverage.  Even if a former patient makes a claim for an event that occurred during the time this provider was insured with Company A, the carrier is not responsible for covering the provider for the claim.  Claims-made policies only cover claims reported, and a result of, incidents that occurred while that policy is in effect. 

Since claims-made policies expose insurance companies to less risk than occurrence-made policies, they are less expensive.  Typically, the policy is inexpensive for the first few years as the provider is at decreased risk of having an incident reported.  As the policy matures, premiums increase each year up to a certain level, usually stabilizing around the five to eight year mark.  

The problem with claims-made policies is that they do not cover the provider for events that are reported once the insurance policy ceases.  For example, if a medical provider insured under a claims-made policy retires and is no longer paying premiums to the carrier, they are not covered for any malpractice claims that could arise even though they are no longer practicing.  Insurance policies known as "tail coverage" come into play in this type of situation.
 
Which type of insurance plan is right for you in your practice?
 

Comments

I'm in GA and would like to know which insurance company offers reasonable rates to NP owned businesses. Any ideas?

denvaz

Hi Lyndsay,

Yes, you would need coverage if you leave the practice. However, if you accept another position this may be built into your new policy. Let me look into companies offering individual malpractice coverage and get back to you!

Erin Tolbert

Could you speak to tail-end insurance? I'm assuming if your company has a claims-made policy, you would need tail-end coverage to cover yourself in case a former patient makes a claim after you have left that practice? Do you know where it is best to get this insurance?

Lyndsay

Hi my question is about mal-practice. What company is best, what all insur. I need( I am mid-level owned and provider) ? How to make sure I am protected all the way around?

Monica Masingal...