Medical Professional Liability Insurance
Medical Professional Liability Insurance offers coverage for providing or failure to provide medical professional services to your patients. Policies typically provide individual third party indemnity limits to pay judgments or settlements for the corporate entity and each physician. Defense costs are usually provided in addition to (outside of) the policy limits of liability without limitation. Standard coverage is generally written with no deductible, although insurers are willing to quote them upon request.
The key elements of coverage are as follows:
- Direct liability for the corporate entity
- Direct liability for the physicians
- Direct liability for the non-physician healthcare professionals and administrative staff
- Vicarious liability for the acts of the physicians, healthcare professionals and administrative staff
Medical Professional Liability Insurance is not a commodity. There are significant differences in policies and insuring companies. Too often doctors focus only on the short-term price, which could lead to poor results and higher long-term costs. When choosing a medical professional liability insurance company, in addition to price, we recommend that doctors and medical groups give consideration the following items which may be differentiating factors:
Claims Made or Occurrence Coverage options
All medical professional liability companies are not created equally. There are established financially secure standard admitted companies, surplus lines companies who specialize in out of the box, distressed or hard to place risk, and newer start-up companies who typically compete on price only. Newer start-up companies or risk retention groups might fill a need in the marketplace but are typically poorly capitalized in comparison to the established financially secure companies and may not perform as well if you actually have to use the insurance. We believe this greater risk should be factored into the decision-making process. In assessing a potential insurance company to partner with we consider the following characteristics as being ideal:
- Insurance Companies rated “A” (Excellent) or better by A.M. Best Company
- A significant amount of surplus (money to pay claims), in the hundreds millions or billions.
- Solid financial ratios
- Premium to surplus ratio
- Expense ratio
- Loss ratio
- Combined ratio
- Expected future stability. As there were past crises in the medical professional liability insurance market, it is important for doctors and medical groups to gain knowledge and form an opinion as to their insurance company’s expected future stability. Commitment to the venue should also be considered.
Some companies push to settle claims for financial reasons. Other companies believe in protecting the reputations of their insured physicians in court. It is important to assess the culture and philosophy of how the insurance company handles claims. Some companies look at claims and try to find a way to deny coverage, while other physician-centric companies may look at that same claim with the goal of finding a way to include coverage to protect their policyholder. Additionally, we recommend giving consideration to the following:
- Experience managing claims and taking cases to trial
- Number of cases taken to trial
- Win ratio at trial
- The lawyers they use
Incident Sensitive Claims Trigger
In most standard medical professional liability policies, the coverage is triggered by the doctor or medical group reporting an incident that they reasonably believe will result in a claim sometime in the future. If that reported incident ever does become a claim, that insurance company will provide the coverage. However, there are medical professional insurance policies that include a demand sensitive claims trigger, with which coverage is only triggered by written demand or lawsuit. This is not ideal. It can be very difficult to change coverage back to a policy with an incident sensitive claims trigger, as underwriters do not want to pick up the exposure of the past incidents that would have stayed with the prior insurance company if they provided an incident sensitive claims trigger.
Pure Consent to Settle
The best companies provide policy language similar to: “We will not settle any case without the written consent of the physician.” with NO exception. Some companies include this language along with a “hammer clause”. The hammer clause would limit the insurance company’s liability (while increasing yours) if you choose to settle and they do not agree. This is not ideal.
Free Tail Coverage
Most policies provide free Tail coverage for physicians at retirement after one to five years of continuous coverage (depending on the company). Quality standard insurance companies typically provide the Tail coverage for an unlimited time frame. Surplus lines companies quite often offer Tail coverage for a maximum of five-year duration. This is not ideal.
Risk Management and Patient Safety Services
Each medical professional liability company offers a varying degree of risk management and patient safety services with no additional charge. Doctors and medical groups who are interested in improving their practices may benefit from these services. So, it could be valuable to understand the service available and factor that into the decision making process.
Many insurance company policies include extra coverage, which could be a differentiating factor for doctors and medical groups, such as:
- Professional Administrative Defense Coverage
- Locum Tenens
- Cyber Liability Coverage
- Billing errors and omissions coverage
- Clinical Trials coverage
- Contractual Liability
- Good Samaritan Acts
- Informed Consent
- Medical Director Administrative Services
- Quality Assurance
- Refusal to Treat or Patient Abandonment
- Supervision of Medical Students and Residents
- Volunteer Work
- Biomedical Waste Disposal
Fill out and submit the contact form on this page, or call Oros Risk Solutions today at 1-866-596-3859 to arrange to speak with one of our knowledgeable specialists about Medical Professional Liability Insurance.