Veterinary Malpractice Insurance (Do Vets NEED Tail Coverage?)
Why veterinarians do not need tail insurance. Now, this is not a funny pun. This is an actual type of insurance that’s utilized through most medical and healthcare-related professions. However, when it comes to veterinarians, they 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 upon 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, tail is usually around twice what your annual premium is.
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, like 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 upon 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.
The AVMA PLIT also offers licensing board defense for a small fee, and every vet should seriously consider adding that to their underlying malpractice coverage.
Professional Veterinary Malpractice Coverage
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.
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 for. 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 what the same policy limits around 2,600 per year. So, a significant almost tenfold increase from small animal 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.
How Much Does it Cost Veterinarians?
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 veterinarian, 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 veterinarian 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.
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 tail is not necessary because the employer almost always covers it. It’s better for the veterinarian 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 veterinarian unless there may be deductible that they would be responsible for.
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.
License Defense Malpractice Insurance
What is the AVMA professional license defense insurance? The AVMA or the American Veterinary Medical Association has what is called the PLIT, which is a Professional Liability Insurance Trust. And then through that trust, they offer vets a variety of different insurance types. The most common or at least the most utilized by vets is the professional liability insurance also known as veterinary malpractice insurance, and so if a veterinarian was sued by a client, they would be covered under the malpractice policy. And then the AVMA also offers professional licensing board defense coverage and let’s kind of walk through that. If a past client files a board complaint against the veterinarian and they have this coverage offered by the AVMA, they would have an attorney provided and assigned to their case without any kind of payment necessary from the veterinarian.
Let’s go over the costs. They have three types of plans, and the plans are based on the defense limit. Meaning how much can be spent on the case, on attorney’s fees without the vet having to cover any of it. And it’s 25,000, 50,000 and a hundred thousand. And the annual premium is $104 for the $25,000 limit, $120 for the $50,000 limit, and $135 for a hundred thousand dollars defense limit. Now, as a professional licensing board attorney myself who has represented, I think, close to a thousand healthcare professionals before the different licensing boards, a hundred thousand dollars defense limit is probably unnecessary and honestly crazy as far as how much it could cost a veterinarian. Like a normal licensing board attorney for just an average case if they’re doing a flat fee can cost somewhere between 5,000 to maybe 10,000 at the most. It is exceedingly rare for a case with a vet to go beyond that. Really the only scenario where a vet could rack up $50,000 in legal costs would be, let’s say they went through the board process, they were unhappy with the decision, they appealed, went to an administrative hearing, which is kind of the process in every state.
They were unhappy with the administrative law judge’s decision, then they decided to appeal this case to the Arizona superior court, and then they went through that litigation process in superior court, that is a scenario where a vet could rack up one of those large limits. If it’s just a normal board wrap, meaning, someone files a complaint, there’s an investigation, and the vet goes before the board, it is very unlikely that you would rack up even $25,000, which is the lowest limit in legal costs in attorney’s fees. There’s just only so much that can be done in these situations. And there are only so many appearances that need to be made by the attorney that it would just be very hard to get that to that amount.
Additionally, these insurance companies place some relatively low caps on the hourly rate for defense attorneys. There is no cap if you were just to hire an attorney on your own, they could charge you whatever they want. Whereas if you have this policy, usually the hourly rate cap is somewhere between 175 to 225 an hour for the attorney representing you. And so, because the cap is so low compared to what a normal attorney would charge who is experienced doing this type of thing, you just have, I guess, more hours that can be spent by your attorney defending you before you were to reach those limits. It is a no brainer to get this coverage. I mean, for $120 a year to have $50,000 in a defense limit for a board case, it’s worth going and paying for that per year.
Veterinary Liability Insurance for Board Issues
I think most vets think there’s a very small chance that I would have a board complaint filed against me. However, I’ve defended plenty of vet board cases. And usually, it’s when a pet dies and obviously people are very attached to their pets. And most of the time, it’s not the fault of the vet that the pet passes. But when it’s an owner who’s just absolutely attached to the animal, they want to blame somebody, and the vet is the person that they go after. So, if there was death involved and someone was just very upset about it, the only recourse they can take is to file a board complaint unless they want to go through with a malpractice claim, but honestly, it’s rare that there’d be a lot of plaintiff’s attorneys that would be willing to take of that malpractice case.
There’s just not enough money in it to make it make sense. I guess the reasons why that could be open to liability with the board case would be if their documentation was poor if they deviated from the standard of care when they were providing care to the animal. And then there are some behavioral issues as well, substance abuse issues, criminal issues, those types of things that sometimes may be reported, but those are exceedingly rare when it comes to deaths. Most of the time it’s either a documentation error or a clinical error. And then the board would obviously investigate it. The vet would have to present in front of the board at some point, and then the board would vote to decide on what they were going to do to the vet. But just to hammer this home, it is absolutely worth the extra hundred dollars a year to get this coverage. There’s no reason not to.
Consultation with Chelle Law
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