In this, the last of a 3-part series on things new doctors should know about medical malpractice insurance, we discuss a few important aspects to consider when choosing Professional Malpractice Insurance Carriers.
Carrier Choice Counts In More Ways than One. Faced with choosing between several insurance companies, new physicians often make poor decisions based entirely on the cost of the policy. While price is an important consideration, (especially since new physicians often have a heavy debt burden to repay,) coverage is equally (perhaps more) important. Again the key is to look at the matter in on a long term basis, rather than simply asking “how much will I pay this year?”
It cannot be stressed enough that working with an insurance professional to explore all the different options out there is the only wise thing to do. This is the one time a physician is definitely in the position to choose from any of the top rated insurance carriers, yet some new doctors make the mistake of choosing to save a few hundred dollars and get coverage through Risk Retention Groups (RRG), or Captives or other similar ventures.
Here’s the scenario: As a new physician, Dr. Smith is told the malpractice malpractice insurance average premium will be $25,000 a year. In an effort to reduce the cost, Dr. Smith decides to obtain coverage from a risk retention group, because a colleague mentioned that they were really cheap. Not understanding much about the coverage, Dr. Smith is thrilled to get a quote for “only” $19,000 and writes a check before even reading the contract or doing any research.
Six months later Dr. Smith is named in a lawsuit which lacks merit. Dr. Smith is is given no choice or input on the choice of defense counsel (the risk retention group saves money by having one attorney firm handle all claims). Dr. Smith is also not consulted when the case is settled on for $250,000 (the RRG includes a clause in the contract that clearly gives them the right to settle a claim without Dr. Smith’s consent). To add insult to injury (and damaged reputation,) Dr. Smith receives a non-renewal (cancelation) letter from the RRG due to the $250,000 payout. In a panic, Dr. Smith finally calls Presidio for help. (Please refer to this blog post for What do Do when you’re being non-renewed). We can help guide this new doctor towards better choices in the future, but it’s too late to take back the poor choice of not getting a free consultation from Presidio in the first place.
Initial savings? $6,000 Net cost? Untold, as the average premium will be higher and the cost of a damaged reputation can’t easily be determined. Cost of giving Presidio a call before buying a policy? Free, yet priceless!
New Physician Malpractice Insurance Article Series
Part 1 – New Physician Insurance Scenarios
Part 2 – New Physician Insurance Strategy
Part 3 – New Physician Insurance Risk