1. Know Your Carrier
In order to succeed with medical liability insurance, an insurance carrier must have solid financial stability and expert claims handling. Be confident your insurance carrier will have the resources to respond in the event that a claim should ever arise. Purchase coverage from a well capitalized, financially sound institution. Insurance rating agencies, such as A.M. Best, assign companies grades based upon their perceived strength and can be useful when making a choice.
Be aware that many captives and Risk Retention Groups are often unrated. This is not necessarily a reflection of weakness, there are many unrated captives and RRGs which are well capitalized and soundly managed, and examining the financial integrity of the parent(s) or sponsor(s) is a good way to judge the quality of such programs.
Take into consideration the amount of focus a particular carrier gives specifically to physicians. Some companies are owned, operated, and governed by physicians. The level of commitment to medical liability insurance can have considerable implications in the risk management and claims handling philosophies of a carrier. Examine the company’s understanding of your particular specialty or profession.
Investigate the claims management philosophy of any carrier being considered. Buy insurance from a company with a strong commitment to providing qualified and reputable legal counsel as well as expert claim management services when needed. Verify whether or not you maintain the right of consent to settle a claim against you.
2. Claims-Made vs. Occurrence
Occurrence: Occurrence coverage provides protection during the covered policy period, regardless of when the patient files a claim. As long as the incident occurred during the policy period, your occurrence policy will respond – even if the claim is made after the policy period expires or after you stop practicing. You don’t need to worry about purchasing an extended reporting endorsement (tail) when you have an occurrence policy.
Claims-Made: Claims-made coverage responds to claims based on when the claim is first made against you, regardless of when the patient visit occurs. This means you must have coverage in effect when a claim is filed. If you cancel a policy for any reason, you would purchase an extended reporting endorsement (tail) to cover all future claims made against you.
Why is there a price difference between occurrence and claims-made?
Claims-made coverage tends to be less expensive than occurrence at first. Here’s why:
Steps – Because a malpractice lawsuit is filed on average for two to three years after the patient treatment, the risk of a malpractice claim being filed is generally lower during the first few years of practice.
For example, the only way to have a claim in the first year of practice on a claims-made policy is to see a patient and be sued by that patient in the same year – a relatively uncommon event.
As time passes, the policy is said to “mature” as the risk of malpractice claims being filed rises. The claims-made premium cost will increase or “step up” over approximately five years until it is close to the occurrence rate.
Get more information about Occurrence vs. Claims-Made Medical Liability Insurance here.