Medical malpractice insurance is as necessary to a physician or healthcare provider as a stethoscope. The insurance protects the healthcare provider from having to bear the full costs of a legal defense and settlement in a malpractice lawsuit. Like other insurance policies, there are many options, complex clauses, and liability limits when it comes to malpractice coverage. With that in mind here’s 5 tips for getting the best medical malpractice coverage.
- When deciding on a malpractice insurance policy, there are two types to choose from: a claims-made policy or an occurrence-based policy. A claims-made policy covers the insured for claims made during a policy period as long as the claim is filed during the policy term. An occurrence-based policy covers incidents that occurred during the term of the policy, no matter when the claim is made. Neither policy will cover incidents that took place before the date the policy was initiated.
- Costs vary to a great degree on the two types of policies. Premiums on a claims-made policy start low and build up slowly over five years. Premiums for occurrence-based policies are priced at a mature level from the day the policy is initiated. This means a claims-made policy is usually less expensive than an occurrence-based policy.
- Purchase tail coverage if you choose a claims-made policy and later decide not to renew it. Tail coverage continues to cover claims for actions that occurred during the policy period even if the medical practice has ceased. Tail coverage generally covers a physician indefinitely after it is purchased and covers a specific period of practice known as the prior acts date.
- Obtain a policy with a “consent to settle clause” which requires the carrier to obtain your written permission to settle a claim against you.
- Insure defense costs “outside policy limits.” This clause means defense costs do not erode the limits of the liability policy. For example, if the policy limit is $1 million per occurrence and defense costs are $150,000, you would still have the $1 million to cover a potential award for the claim.