What is Medical Malpractice Insurance Coverage?

Healthcare providers must protect against liabilities arising from medical negligence through medical malpractice insurance. 

Medical malpractice is a legal liability caused by a professional healthcare provider. In this case, the physician deviates from the expected healthcare standards, thereby causing injury to a patient. Medical malpractice (negligence) occurs through misdiagnosis, failure to treat, prescription drug errors, birth injuries, and surgical errors. 

In this article, we’ll cover:

• What is medical malpractice insurance?
• Who needs medical malpractice insurance?
• What does medical malpractice insurance cover? 
• What kinds of medical malpractice insurance are there?
• How much does medical malpractice insurance cost?
• Who pays for medical malpractice insurance coverage?
• Does your healthcare policy match your practice?
• How do you select medical malpractice insurance?
• What to look for in a liability insurance carrier?

What Is Medical Malpractice Insurance?

Medical malpractice insurance is simply an insurance policy that covers healthcare workers against professional liability such as claims of injury and medical negligence. Usually, medical malpractice coverage is a necessity because claims in this field can be substantial. 

NSO malpractice insurance is essential for all nurses and other healthcare professionals who don’t want to cover professional liabilities out-of-pocket. Typically, Med Mal is provided by various carriers. 

Who Needs Medical Malpractice Insurance Coverage?

Everyone directly interacting with patients to provide healthcare services needs medical malpractice insurance. Importantly, fitness professionals also need to consider this policy to cover risks in their industry. Therefore, if you’re in any of the following professions, it’s essential to consider this coverage. 

• Nurse Practitioners
• Physical Therapists
• Licensed Practical Nurses
• Personal Trainers
• Physician Assistants
• Nurse Anesthetists (CRNAs)
• Registered Nurses
• Optometrists
• Nursing students and more

What Does Medical Malpractice Insurance Cover and Not Cover?

As highlighted earlier, medical malpractice coverage covers physicians for negligent claims such as childbirth-related injuries, medication errors, surgical errors, misdiagnosis, wrong-site surgery, and other claims of wrongdoing. 

However, you need to understand that there are some aspects that a medical insurance policy will not cover. For example, medical malpractice policies will not cover illegal acts and claims of sexual misconduct. Also, the policy will be considered void if healthcare professionals misrepresent facts during policy application. 

What Kinds of Medical Malpractice Insurance Are There?

Medical malpractice insurance can either be claims-made or occurrence-based. Here’s the difference between the two types;

Claims-Made Medical Malpractice Policy

In this case, the insurance provider will cover a healthcare provider for medical malpractices which occurred when the policy was in place. The doctor must also report the claim when the policy is already in place. 

However, incidents reported outside the coverage period are not included. In such a case, a healthcare provider might consider a tail policy for claims reported when the policy was no longer in place. 

Occurrence-Based Medical Malpractice Policy

Occurrence-based plans cover malpractices during the coverage period. This type of insurance coverage also covers claims filed when the policy was no longer active. 

However, occurrence-based insurance policies are more expensive than claims-based due to their nature of coverage. Also, your employer might not be willing to provide such a policy due to cost challenges. 

How Much Does Medical Malpractice Insurance Cost?

The cost of medical malpractice policy is a sensitive aspect that you must analyze. Generally, there’s no defined amount that one has to pay. In most cases, your specialty and geographic location determine how much cost you’ll have to pay. Also, your personal claims history has a massive role in determining your insurance costs. 

Insurance carriers will estimate your annual premiums by breaking up the total coverage by the number of years covered. This will help determine the yearly premiums while spreading risks across the coverage period. 

Who Pays for Medical Malpractice Coverage?

Medical malpractice insurance can either be paid by individual providers or by employers. Depending on the type of insurance plan you’ll have, it’s always important to know that you’ll get some pros and cons. 

Individual Coverage

Outside the employer-provided plans, doctors can choose to get their coverage. Individual providers offer some flexibility that employer coverage might not provide. They work directly with insurance advisors to obtain coverage that meets their needs. In addition, physicians who get individual coverage can overcome the disadvantages of group plans by working in multiple locations and can easily switch providers when renewing their plans. 

Employer Coverage

The majority of the employers in the country provide medical malpractice insurance policies. In the group plan, employees are easily added or removed based on their employment status. Most importantly, employer coverage is a claims-made policy, which means that only claims reported when the policy was active are covered. Therefore, physicians need to consider tail coverage to mitigate the disadvantages of this policy. 

Does Your Healthcare Policy Match Your Practice?

Generally, the majority of insurance policies have limits. For example, a standard medical malpractice insurance policy may range from $10,000 to $30,000. The lowest amount ($10,000) is what the policy provider will pay per claim during the policy period. The second amount ($30,000) is the maximum amount that your insurance provider will pay during the policy period. 

You’ll be personally liable for any amount exceeding your policy limits. Therefore, you should pay attention to your policy limits and ensure they align with your geographical location and specialty. In addition, you need to work with an experienced physician contract lawyer when discussing insurance limits with your insurance provider for maximum protection. 

How Do You Select Medical Malpractice Insurance?

It’s not always easy to choose the best medical malpractice insurance policy. For example, in some states, claims are very high. So, you need to select the right insurance with the proper policy limits. 

Your medical insurance limits need to be sufficient enough to cover the possible settlement and rigorous defense where necessary. Again, it’s advisable to work with a medical physician contract attorney to get advice on the best insurance policy. 

What to Look for in a Liability Insurance Carrier?

There are multiple medical malpractice insurance companies in the industry today. However, your objective is to work with the best provider to access quality policies and good customer services. 

The carrier’s sensitivity to policyholders, claims procedures, and fiscal soundness is a critical consideration when choosing your provider. It’s always necessary to seek advice from a physician who has worked with a carrier before making final decisions. 

You need to know whether the insurance provider has risk management programs that provide emotional support for defendants. It’s also essential to seek discounts and participation in risk management. If You need a physician contract lawyer or you would like to hear more about medical malpractice insurance, contact Chelle Law today.

Additional Information – What Are Types of Medical Malpractice Insurance?

What are the different types of medical malpractice insurance?  This is a frequent topic that comes up when I’m reviewing a contract. I would say, during med school or training, most physicians are not given a breakdown of the different types of malpractice insurance. So, it’s always a good idea when I’m talking to a physician who is relatively new and doesn’t understand the difference. Just to kind of give a brief breakdown of each one and maybe the pros and cons of each. There are three main types of professional liability insurance for physicians. You have self-insurance programs from big hospital networks, and then most private practices will utilize one of two, either occurrence-based coverage or claims-made insurance.

Let’s just kind of talk about three of them. First, self-insurance. Large hospital networks will usually have their own policy in the simplest way: they’ll set aside a pot of money, pay claims out of that. In that circumstance, generally, the physician doesn’t have to worry about purchasing tail insurance. That’ll be covered by the employer’s self-insurance program. This is great. I mean, it’s great insurance when a physician never has to worry about tail and doesn’t have to worry about paying for the underlying premium, that is kind of a nice, secure feeling. That’s what most large hospital networks utilize. The next type is occurrence-based coverage. And what that means is a policy has to be in effect when the event actually occurs.

Any kind of malpractice event is going to occur while you’re employed with the employer. So, you are covered in perpetuity if an occurrence-based policy is in place and then something happens. The benefit of occurrence-based insurance is that you don’t need to purchase tail insurance. The downside is it costs more than a claims-made policy. A good rule of thumb is that occurrence is about a third more expensive than claims-made policies annual your premium. So just to give an example, let’s say you have a claims-made policy and it’s 6,000, then your occurrence-based coverage would be around 8,000 per year. There is a math equation that needs to be considered to determine what is the best policy for a physician. And I’ll get into that at the end. But honestly, most of the time, physicians don’t have a choice between an occurrence-based policy or a claims made policy. It’s whatever the employer chooses to provide.

That’s what the physician must go for. The last one is claims made. What that means is a policy must be in effect when the claim is made. When someone terminates a contract and they no longer work for the employer, there is still a gap in between their last day of practice with that employer and the last day somebody can sue. That’s called the statute of limitations for malpractice claims. In most states, it’s two years. If there is no policy in effect if a claim is made, then the physician is in trouble. Nearly every employer will require one of the parties to purchase tail insurance. Tail insurance simply covers that gap in between the last day that a physician works for the employer and then the last day somebody can sue them.

Now, it’s two years from when the patient either knows or should have known of a malpractice incident. It’s possible that it can go past two years if there was no way for the patient to know until a few years down the line. I’d say most of the time, if a physician is working for a private practice, small physician-owned group, or something like that, they’re going to have to be the one that purchases the tail policy. There are employers that will pay for it, but I’d say more times than not, the physician is responsible for their own tail. Tail costs about two times what the annual is. So, if a physician has a $10,000 annual premium, you just multiply that times two, and then that’s about how much they’ll have to pay for tail insurance.

It’s a one-time cost, so you don’t have to pay it every single year until the statute of limitations runs. It’s just a one-time cost. As soon as you finish the employer and then you’re covered for that amount. Now, there can be different lengths as far as the tail policy goes, but most of the time the tail policy will simply cover a reasonable amount of time until the statute of limitations is over. Somewhere two to five years. As I mentioned before, as far as the math equation, if a physician does have their choice of either occurrence or claims made, then you need to think about how long you’re going to be with the employer.

If you’re paying a third more for occurrence coverage per year, but you don’t have to pay tail, then it might make sense to utilize that if you’re going to be there on maybe a short-term basis. Let’s say you’re there for two years, you’re going to pay a third more for two years, but then you don’t have this big one-time cost at the end. If you’re in a claims made policy and you’re going to be somewhere long term, then it might make sense to use claims made. Therefore, your annual premium is cheaper, but then you’ll still have that hit on the end with the tail coverage. Which one is better? It honestly just depends upon the situation. And then certainly, it depends upon specialty.

The annual premium can vary wildly. Like primary care, peds or something that could be 6,000 a year whereas OB-GYN, one of the higher-level surgeons, cardiac surgeon, or something like that, could be between 20,000 to 50,000 a year, and then just do the math on that tail cost. It could be forty to a hundred thousand for their tail. It’s specialty dependent as well. This certainly is something that we negotiate. When we’re looking at a physician contract, you always must consider, okay, what’s most important to the physician. And then what are the areas that we can work on more comp, more time off, better bonuses, whatever. But who pays for talent insurance certainly is an important piece for most physicians, especially the ones in those higher-end specialties?