What is Occurrence Insurance for a Veterinarian? | Veterinary Insurance
What is occurrence-based insurance for a veterinarian? This is malpractice insurance. There are two common types of malpractice insurance. You have occurrence-based and claims made. But most veterinarians get their professional liability insurance through the AVMA PLIT. And that policy is an occurrence-based policy. What does that mean? An occurrence-based policy simply means a policy must be in effect when the malpractice incident occurs. With the claims-made policy, it has to be in effect when the claim is actually made. A vet could leave an employer, but then someone could sue them after the fact, let’s say a year later. And so, if that were to happen, they would need what’s called a tail policy that covers the gap in between when they leave the employer and then when the statute of limitations runs, which is just kind of how long someone can sue you for something.
Insurance Coverage Options for Veterinarians
And then after that date, they can no longer sue you for that. But as I said before, the AVMA offers an occurrence-based policy, which means essentially the vet is covered indefinitely for anything that happened while they were working for that employer. As far as the cost of malpractice insurance for a veterinarian, it’s extremely inexpensive compared to other healthcare professions. Just as an example, a policy with 1 million, 3 million limits, meaning 1 million per occurrence and then 3 million aggregate per year. Let’s just say a small animal exclusive vet is $248. Extremely cost-effective compared to most others. Just as an example, let’s just say you have a general surgeon physician, their malpractice per year could be 15,000. Whereas a vet in this situation is 250. The most expensive liability insurance for veterinarians is equine exclusive. And that could be why the same policy limits around 2,600 per year. So, a significant almost tenfold increase from small animals to equine. And it’s all based upon damages. Obviously, damages to a cat versus damages to a horse could be significantly different. Now, it’s rare for someone to sue a veterinarian for malpractice.
Most of the time it’s just simply not worth the time of the plaintiff’s attorney. Any time, someone decides to sue someone else for malpractice, obviously, they need an attorney to assist them with that. And then when an attorney is deciding of whether they take a case or not because almost all plaintiff’s malpractice cases are taken on a contingency basis, meaning the attorney only gets the money if they are successful in the lawsuit. And the damages are so small for most animals that it’s just not worth the time of the attorney, to be honest. However, if you had a horse and maybe a racehorse or performance horse where they could generate a lot of income and then something would happen to that, there could be a significant amount of damage and it makes a little more sense to pursue an action like that.
And that’s why the insurance for them is 10 times more expensive than for small animals. Now, if you are a vet, your employer should cover your annual premium. Your annual premium is just simply how much it costs to insure you on an annual basis. And that is not a cost that you should have to undertake. Maybe if you’re an independent contractor, it would make sense for you to pay the expenses associated with your malpractice insurance. However, if you’re working for an employer, they should pay for your underlying policy, that’s just kind of a standard benefit. And essentially it is so affordable. There’s really no argument that an employer can make that the vet should be the one to cover those costs. It just doesn’t make sense. And especially because tail insurance is not needed for a vet if they’re going through AMVA. Sometimes that’s a cost that is passed through to the provider once the contract terminates, but in this situation that just simply is not something that occurs.
Veterinary Professional Liability Insurance
So, that’s occurrence-based insurance for a veterinarian. Once again, it’s honestly a relatively small thing that would be negotiated in a contract because the tail is not necessary because the employer almost always covers it. It’s better for the vet to focus on other things, I guess that’s the best way of saying it. One other tip: the AVMA also offers professional liability defense for an extremely small fee. It’s like $50 more per year. And if someone were to file a board complaint against you, you would automatically be provided legal counsel at no cost to the vet unless there may be a deductible that they would be responsible for.
Veterinarian Insurance Costs
So, I would suggest if you are going to get malpractice insurance, which you will, that you ask the employer to pay for the extra policy that will cover any kind of board defense, and if they’re not willing to pay for it, obviously, spend the 50 bucks or a hundred dollars or whatever it is, so that you’re covered for a board defense. To hire a licensing board defense attorney, I guess depending upon the severity of the case, can be anywhere between $5,000 to $10,000. And it’s just well worth the little amount per year to cover that.
Veterinarian Insurance Coverage and Vet Tail Options
Why veterinarians do not need tail insurance. Now, this is not a funny pun. This is an actual type of insurance that’s utilized in most medical and healthcare-related professions. However, when it comes to veterinarians, generally do not need it. And for the following reasons. Well, first, nearly all veterinarians get their professional liability insurance from one place. And that’s the AVMA. The AVMA has a professional liability insurance trust or the PLIT. And then through that, they offer professional liability insurance to veterinarians based on specialty, and the type of insurance that they use is called occurrence-based insurance. Occurrence-based insurance simply means a policy has to be in effect when the malpractice occurs.
Whereas with a claims-made policy, a policy has to be in effect when the claim is actually made. And it’s possible that a vet could leave an employer and then someone could sue them after the fact, and if they are sued after they leave an employer, there has to be an additional policy that kind of covers the gap in between their last day with the employer and then the last day somebody can sue them. Because AVMA offers an occurrence-based policy, veterinarians simply do not need tail insurance. Now, why would someone choose occurrence over tail? Well, cost. Generally, occurrence-based insurance is about a third more expensive than claims-made coverage. However, if you have a claims-made policy and you have to purchase tail insurance, the tail is usually around twice what your annual premium is.
Veterinary Malpractice Insurance
For vets, malpractice insurance is exceedingly less expensive than almost any of the other healthcare professions. Just to give you an example, a small animal exclusive policy with limits of 900,000 is only $213. It’s very, very small. Just as an example, a family practice physician, their annual premium is usually going to be somewhere between 6,000 to 8,000 a year. And what I just said, is that a small animal exclusive vet is going to be $200 a year. It’s such a small amount that’s why they utilize occurrence-based insurance.
Why is it so small? Well, it’s just based on risk. Simply the damages for malpractice action against a pet are extraordinarily smaller than the damages of, let’s say, an OB-GYN committing malpractice against a baby. The damages are generally from the expected lifetime of a patient. And so, it’s just much smaller for an animal. It’s really not something that most vets should worry about. I mean, obviously, you’re going to have a malpractice policy and if you’re a veterinary associate employed with a veterinary practice, they’re going to pay for that, or at least they should pay for that underlying premium. The only specialty that I would just say is relatively expensive would be predominantly equine vets. An equine policy with the same limits, as I mentioned before, could be around $2,000 a year.
Not inexpensive, but also not going to break the bank for someone who does predominantly equine animal work. That is why a vet does not need tail insurance. Certainly, when I’m talking to vets, if it comes up, there’s always a chuckle just because it sounds kind of silly, but that’s how it’s known across the industry. And that’s why I wanted to do a brief discussion of that. I find vets really have a lack of understanding of liability insurance. So, it’s always like a good exercise to kind of go through, alright, here’s what occurrence-based coverage is, here’s what claims made is, here’s what tail, here’s what normal limits are for you. And then to just have a brief discussion of the risk and that type of thing.
What is Veterinarian Malpractice Insurance?
Veterinarian malpractice insurance is a policy that covers the liability that a veterinarian has if something should go wrong with a client’s pet that leads to the pet’s death or prolonged injury. Such incidents can happen even in the most well-run veterinary practices in the world, and even if everything was done strictly by all best practice procedures. This is why most vets are well-aware that they need coverage to keep themselves protected.
Settlements for Malpractice Insurance Cases are Common, but Not Always Desired
Insurance companies are often quick to try to settle a case outside of the court system. They do so because they usually do not want to put forth the time and effort necessary to actually see a case through. The costs are higher for an insurance company when a case goes to trial, and the insurance company always wants to save as much money as it possibly can. Thus, the insurance company may take actions that are not in the best interest of its clients. That is what you need to pay particular attention to when signing up for a malpractice policy.
Veterinarians who believe that they followed every procedure as precisely as they should have may want to reach out to a veterinarian employment contract lawyer to receive additional counsel about steps that they can take next. The reason for this is that they may have a legitimate case worth fighting for in court. If they immediately give up because that is what their insurance company wants, then they may do serious reputational damage to themselves.
Protection for Veterinarians via a Qualified Attorney
Veterinarians should always seek out a qualified lawyer if they are faced with the prospect of needing to defend themselves against a malpractice claim. These animal healthcare workers are very good at the work that they do, but they need the training and expertise required to defend themselves in a court of law. In those circumstances, it is necessary to hire someone with specialized training to handle your case. Lawyers that work on veterinary law cases are extremely valuable in these situations.
They can help with:
- Understanding the nature of the claim brought against you – Will help you see precisely what you are being accused of by your former client.
- Working through the details of your insurance policy – If you hold malpractice insurance, your attorney can go through the specific clauses of your policy to ensure that your coverage will protect you.
- Navigating the legal system – Court processes are often prolonged and dragged out. Laypeople do not understand the various procedures that they will have to go through in order to achieve a resolution in their case. However, a qualified attorney can certainly work with you on this.
You need this kind of backing to keep yourself from becoming overly burdened by the stress that has now been layered onto you. It is also important to take into consideration whether you have a non-compete that could preclude you from practicing within an area you want to practice in.
What is AVMA Excess Limit Coverage?
What is the AVMA excess limit coverage? The AVMA or the American Veterinary Medical Association has what’s called the PLIT, which is the Professional Liability Insurance Trust. And the PLIT offers vets a wide range of different types of insurance. The two most common are the professional liability insurance, also known as malpractice insurance, then they also offer licensing board defense coverage as well, so that if there was some complaint filed with the board, the vet would have an attorney signed to their case and they wouldn’t have to pay anything out of pocket. As far as the underlying coverage, it is exceedingly inexpensive for a vet to have malpractice insurance.
Veterinary Liability Insurance
As an example, a small animal exclusive vet can get covered for $250 per year. And how it works is they do offer different tiers of insurance based upon the limits. Limits are simply how much the insurance company will cover the vet. For instance, if you have 1 million, 3 million coverage, that means you have 1 million per claim, so they’ll cover up to a million dollars per claim, and then they’ll cover up to $3 million on aggregate per year. Meaning, that the total amount of claims paid out can’t exceed 3 million for the entire year. Now, is it likely that a vet would ever have a case with $1 million in damages? Absolutely not. But they still offer that amount. I believe you could get one hundred thousand, three hundred thousand, nine hundred thousand, and then 1 million, 3 million.
Those are the three different levels that can be paid for by the vet. And then as far as prices go, the most expensive is equine-only vets. And if you had a 1 million, 3 million policy, I believe the cost per year to an equine vet would be like 2,500 per year. Now, it’s an occurrence-based policy. That just means a policy has to be in effect when the malpractice incident occurs. There is claims-made insurance for other healthcare professions. In that scenario, you would need tail insurance. And that covers the gap between when you leave an employer and then the last day somebody can sue you, but for vets who go through the AVMA, this is something you don’t need to worry about.
Excess Limits for Professional Liability Insurance Policy
The AVMA also offers excess limits, meaning, if you have the most expensive policy offered for professional liability insurance, you can also purchase additional coverage that would cover you for an additional amount of money each year. And just to give an example, let’s say you had a 1 million, 3 million policy as a small animal exclusive vet, as I said before, it’s like $250 per year. You could get an additional 1 million, 1 million limit for $106 per year. Is the excess coverage necessary? Probably not. It would be exceedingly rare for any vet to need coverage beyond that. There would have to be some kind of insane catastrophic combination of events to get to a million dollars in damages for malpractice against an animal.
But if you’re not worried about the cost and want to feel more comfortable with additional limits, it’s very affordable. Now, as far as who should pay for your underlying malpractice premiums, the premiums are just what it costs to insure you on an annual basis. If you’re a veterinary associate, the employer absolutely should pay for your underlying premiums for two reasons: one, it’s just industry standard and then two, they’re exceedingly affordable in the veterinary medicine arena compared to others like physicians, NPS, and PAs. It’s just inexpensive compared to those other ones. And so, there’s just no reason that the employer shouldn’t pay for it. Will they pay for kind of the boost and excess limits if that’s something that you’re interested in? maybe, maybe not.
AVMA Excess Limits to Protect Your Veterinary Career
And if they’re not interested in doing that, then there’s no reason that the vet can’t shell out a couple of hundred dollars to feel a little more comfortable about the limits. Once again, probably unnecessary, but it’s there. The veterinary industry, as far as malpractice insurance goes, is very different from almost all of the others because the vast majority of vets use the AVMA PLIT. Whereas let’s just take physicians, for instance, there are hundreds and hundreds of professional liability insurance companies that offer insurance to physicians. There is no kind of one big conglomerate that offers them. It’s really state-by-state. Whereas if you could have 90% of a profession that uses your insurance, you can offer lower premiums than if you only had like half of 1% or something like that. So, that’s what AVMA PLIT excess limit coverage is. Will you need it? Probably not, but it certainly is there if it’ll make you feel more comfortable.
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