Choosing a Malpractice Insurance Agent

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Buying medical malpractice insurance can be a time-consuming, frustrating process. There are many different companies to choose from, policy types to understand and coverage nuances that can make it difficult to really know if you’re getting the best coverage at the best price.

For this reason, many doctors and medical groups choose to use an Independent Agent (or broker) to help them shop the market, compare options, and find the best fit for their practice. But before you go about selecting an agent, let’s take a broader look at the difference between working with an agent versus working direct with a company… and then the best way to work with an agent to leverage their resources to give you the widest range of coverage options.

Working with an Agent vs. Working Direct with a Company

Independent Agents do not work for any one company. They represent multiple companies, which gives them the ability to shop around and find the best fit for you. Having access to multiple companies also benefits you because it drives competition, resulting in better pricing (lower costs).

A direct agent’s first duty is to their employer. They are captive agents and can only offer one malpractice solution from one company. A doctor or group would need to contact multiple different carriers on their own in order to get other coverage options to consider – which can be a time-consuming and tedious process. Many malpractice insurance companies do not sell direct, so even if you were to call on them, they would refer you out to one of their agents to provide you with a quote.

Insurance policies aren't like typical consumer products, where the same item can be sold for a different price through different means. Rates are filed with and regulated by the Department of Insurance in each state and carriers do not have different rates for the business they write direct vs. through an agent. Bottom line — it’s the same price. With all of the benefits of using an agent, it just makes sense to leverage their expertise and "carrier reach" to get you a better product.

Working with Multiple Agents to Shop the Market (Market Selection Process)

So you’ve decided that it’s best to use an agent to help you with your malpractice coverage. Why not have multiple agents shop the market for you and have the best man win? Unfortunately, it's not that simple. There are several reasons why this approach not only doesn't work, but it can actually hurt your chances of having the best quote options to consider at renewal.

When a practice administrator or doctor asks multiple agents to go to market for them, it instantly complicates the purchasing process and you lose the leverage that you may have had by working with just one person. It creates an environment where the agent is trying to make a sale as opposed to doing what is best for the client… and becomes more about them making a commission dollar, then about making the right insurance decision.

Consider the following:

1)      When insurance companies know that one agent has control over the decision with their client, they know that they must give it their best shot to be considered. When multiple agents are representing multiple carriers, the customer loses their leverage.

2)      When you work with multiple agents, it can quickly become the “wild wild west”. It’s every man for themselves and agents can block markets, manipulate submissions to make one carrier look better than the next and create chaos during the quotation process.

3)      When multiple agents are fighting for the business, it becomes all about getting the sale instead of doing what’s best for the client. The agent is looking to become the broker of record, not necessarily prioritizing placing the business with the best carrier option.  

4)      Working with multiple agents takes a lot of time. The doctor or practice administrator will have to manage each agent… providing them with the submission packets, answer underwriting questions, sign necessary forms, review the quotes and ask for refinements, make sure it’s a level playing field for everyone and ultimately try and determine which broker and quote are best. It is an incredibly labor-intensive process that typically does not give you the result that you want.

The best course of action is to find and select 1 agent to represent your business in the marketplace. The right strategic partner for your practice will bring the knowledge, service, and resources that you need to get a simple, objective overview of the malpractice market – with no biases or desperate attempts to place you with one carrier over another.

Do your homework to find an agent that specializes in medical malpractice, has experience and knowledge in your state/region, and has access to the best carriers available. You should be able to trust your agent to represent you well, understand your coverage needs, provide ongoing support, and help you find the insurance carrier that is the best fit for you – while ensuring that you’re not overpaying!

Understanding Medical Specialty Ratings and Procedure Changes

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This week we're digging into medical specialties and discussing how they are rated for malpractice insurance. While every carrier has their own underwriting guidelines and pricing criteria, most follow the same general methodology for rating. So how does your training, scope of practice, and procedure base really affect your rate?

No Surgery, Minor Surgery, Major Surgery

For many medical specialties, malpractice insurance pricing is broken into 3 levels: No Surgery, Minor Surgery, and Major Surgery. The provider's procedures and scope of practice will help the underwriter determine which classification best fits the risk. For example, a Dermatologist doing basic sutures, excisions, etc. would likely be rated as Dermatology – No Surgery, whereas a Dermatologist doing hair transplants or certain laser surgical procedures might be rated as Dermatology – Minor Surgery.

Some specialties only fall into one classification based on the nature of their work. Anesthesiology, for example, doesn’t have a “no/minor/major” price break. Radiology can have many different ratings, depending on the scope practice (diagnostic vs. interventional, oncology, mammography reads, etc.). Specialties such as Plastic Surgery, General Surgery, Cardiovascular Surgery, Orthopedic Surgery, OB/GYN, Neurosurgery, etc. are generally always rated as major surgery.

It is up to the provider to keep the carrier notified of any changes to their practice and any new procedures, however, many carriers will ask the insured to complete a renewal application or ask questions at renewal to make sure the current rating is still accurate.

Changing Specialties

Healthcare providers who want to change their specialty or scope of practice should check with their malpractice insurance agent to see how their coverage will potentially be impacted by such a change. Generally, small tweaks to the scope of practice will not affect pricing, but larger changes may. When providers move from a high-risk specialty to a lower-risk specialty (such as an OB/GYN who stops doing obstetrics and does only gynecology work going forward), there may be tail considerations or other costs that must be addressed. Providers who are winding down their practice before retirement should be mindful of this and talk to their agent to understand how coverage will be impacted going forward.  

Questions to Ask Before Offering a New Service/Procedure

So you just finished an intensive training on a new, state-of-the-art medical procedure that you're excited to offer to your patients. You market the procedure on your website and social media and schedule your first few appointments - No worries, right? It might be time to pump the brakes. Before you launch into offering a new medical procedure (or before you even pay for the training) check to see how it might affect your malpractice insurance. Is it covered under your existing policy? If not, can it be added? Will it affect your rate? What happens if you offer the procedure for a few years and then stop doing it? These are just a few of the questions that you should talk to your malpractice insurance agent about before you begin offering a new service at your practice. Taking a little time to research up front will save you time, money, and stress down the road.

 

 

Medical Malpractice Climates Across the US

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When it comes to medical liability laws and culture, where you live (and practice) does make a difference. In this article we’ll be discussing malpractice environments across the United States - key things for doctors to consider as they're looking for a place to work or potential states to expand to.

In the past few decades, many states have passed tort reform and attempted to not only reduce malpractice costs and access to quality coverage, but also improve the overall legal environment. In an ideal world, frivolous lawsuits are minimal and the cases with true merit are identified quickly and handled responsibly. This helps to reduce stress, keep malpractice costs at a reasonable amount (allowing doctors to carry the appropriate amount of coverage), and ensure that victims are compensated fairly and in a timely manner.

Best States to Practice Medicine In

So what states are best? The states with the best malpractice environment (i.e. the most doctor-friendly) generally fall into one of three categories:

·       States with malpractice caps

·       States that have passed meaningful tort reform

·       States with the “right culture”

There have been many articles published with rankings of states based on cost of living, average salary, malpractice costs, etc. but looking at the country purely from a medical liability perspective, the best states to practice medicine in are those with malpractice caps or those that have passed meaningful tort reform. States such as Alaska, Colorado, Indiana, Kansas, Texas, North Carolina, North Dakota, and South Dakota have all enacted reasonable malpractice caps, which set a ceiling on the amount of money that can be recovered in a case. In these states, litigation has decreased, premiums remain relatively low, and malpractice payouts tend to be overall less than in other areas. More than half of the states in the US have passed some form of tort reform, so the list of “good” states goes beyond those mentioned here, but it may take several years before the reform has a real impact in some of these areas. Ohio, for example, has made some real strides in tort reform, but experience hasn’t changed much yet. Time will tell how effective some of the most recent tort reform initiatives are.  

Beyond tort reform and malpractice caps, generally the best states to practice medicine in are those with the “right culture”. For example, Minnesota has not passed any tort reform, and yet they have some of the lowest premiums in the country. Some say that the “Minnesota Nice” culture and the tendency not to sue supersedes any cap or tort reform initiative – it’s just not who they are. The same could be said of Montana, Wyoming, Idaho, Wisconsin, Iowa, Nebraska, and other states throughout the Great Plains and the Midwest - which all have much lower claim frequency and severity, and therefore, lower malpractice premiums.

Worst States to Practice Medicine In

Which states should you stay away from? It’s hard to tell a physician not to practice somewhere because quality healthcare is important everywhere in the United States. That being said, some states are generally more litigious and physicians practicing in those areas will likely pay much more for their malpractice insurance. It doesn’t mean you shouldn’t work there – it just means you should be prepared to pay more (and possibly be sued more). Florida, New York, Washington DC, parts of Pennsylvania, New Jersey and Delaware generally experience more litigation, they have some of the highest malpractice payouts in the country, and malpractice premiums can be very expensive. Even in some states where the overall environment is stable, major metropolitan areas always tend to be hot beds for litigation (Ex: Miami, FL; Chicago, IL; New York City, NY; Detroit, MI; Los Angeles, CA; Las Vegas, NV, etc.).

Expanding Your Practice

If you are considering adding an additional location to your practice, make sure you do your research before jumping in and signing any contracts. Adding additional practice locations may seem like a simple change request, but there are risks (and costs) to consider regarding your medical malpractice insurance. Here are some considerations:

1) What is the overall malpractice environment like in this new location? Are you dipping your toe into a higher risk pool?

2) Is your current malpractice coverage sufficient? Are your limits adequate?

3) Will this increase your premium?

4) Are there other future coverage concerns that you should be aware of? If you start working and then change your mind, how does that affect your coverage? Will you have to buy tail?

5) Will your current employer allow you to work in this new location? Will your malpractice carrier even approve it?

Healthy malpractice environments have many obvious advantages: Lower premiums, fewer frivolous cases, and prompt, responsible handling of true negligence events. But have you considered the downstream effects of meaningful tort reform and healthy malpractice climates in a state? Consider this... healthcare providers practicing in doctor-friendly states tend to have improved quality of life as a result of decreased litigation stress, more money in their pockets, heightened morale, and the ability to practice good medicine without being defensive (and costing their patients more money).  Healthy malpractice climates also improve patient safety, as medical practices and hospitals have an easier time recruiting and retaining doctors, which, in turn, equals greater access to quality healthcare, especially those performing high-risk procedures.

Not sure which state/location is right for you? Talk to a knowledgeable malpractice insurance agent to better understand the area where you’re interested in practicing and learn about the coverage options, policy types, rates, and carriers that are available to you. Need an agent? Aegis is here to help. Contact us today to learn more about this topic and get quotes from the best malpractice carriers in your state.

What To Do When Your Malpractice Carrier Goes Out Of Business

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Help! My malpractice carrier is going under! This week we're providing key steps to take if you find yourself in sudden need of new malpractice insurance. As the medmal market begins to turn, we're starting to see a few carriers exit the market. What should you do if this happens to you? Here are 5 tips to help you take quick action to secure new coverage going forward.

1.       Contact a Knowledgeable Malpractice Insurance Agent

If your malpractice insurance carrier is going out of business (or beginning to show signs of financial instability), the first course of action is to contact a knowledgable malpractice insurance agent to discuss the situation. Be sure to choose an agent that specializes in medical malpractice insurance, has access to many different markets, and has experience in the given field. While many insurance agencies may claim to have expertise in the medical malpractice space, it’s often difficult for multi-line agencies to keep up with the rapidly evolving medmal market. Do your research and find an agent that can offer you the expertise, service, and integrity that you’ll need as you begin evaluating your options.

2.       Review your coverage to determine needs

Once you’ve selected an agent, review your current coverage to determine your needs going forward. If you have a Claims-Made policy, chances are you’ll need to secure prior acts coverage from a new carrier going forward. This means that the new insurance company will assume the responsibility for any future filed claims related to services rendered back to your policy retroactive date. If you have open claims with the carrier that is going out of business, talk to your agent and the defense attorney that is representing you to see how those claims will be handled going forward. It’s possible that the state guaranty fund will step in to handle the claims going forward but be proactive in asking the question so that you know what to expect and can make other arrangements, if need be.

3.       Shop the market

Once you’ve determined your coverage needs, work with your malpractice insurance agent to go to market. Most malpractice agents will have access to 3-4 primary carriers in each state and a handful of excess & surplus (non-standard) markets, as well. Don’t be surprised, however, if some carriers decline to quote your coverage. Some companies shy away from business that is being cancelled by another carrier – even if the cancellation reason has nothing to do with you, personally. A prudent malpractice agent will help you navigate the market and provide you with options and insights to make the “shopping” process as easy as possible.

4.       Compare options

Once you have a handful of quotes to review, carefully compare coverage options and be sure to look at more than just the price tag. Look at the carrier’s history, financial stability, coverage offerings and areas, programs, risk services, affiliations, and other key factors as you are making your decision. Work closely with your malpractice agent to better understand what each carrier has to offer. Oftentimes the agent can provide other insights into the company’s service, timeliness, flexibility, and other factors that may make a big difference to you and your practice.   

5.       Consult with your agent and promptly move to the new carrier

Once you have decided on a new carrier, complete the application and any other necessary forms and move promptly to the new company. It's always advisable to move while there is still time, as opposed to waiting until you receive your cancellation notice and then frantically switch to the first carrier that offers you a quote. Some states will require 30 days (or more) advanced notice for cancellations, so talk to your agent to determine the right time to switch and give yourself plenty of breathing room. Take your time to review the options, compare coverages + prices, and move to a carrier that will be a solid long-term partner for you.

 

Understanding the Non-Standard Malpractice Insurance Market

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Has your malpractice insurance been declined or non-renewed? Not to worry. In today’s marketplace, there are coverage solutions for nearly every situation - whether it's rebuilding your practice after a licensure issue, recovering from several adverse claim events, or looking for insurance for unique types of practices and procedures. The non-standard malpractice market has more options than ever.

Standard Market vs. Non-Standard Market

Standard market insurance companies are admitted carriers, which means they must comply with rigorous rules and regulations set by the Department of Insurance (DOI). Their rates, business practices, advertisements and financial condition are closely monitored by the state and any changes must be reviewed by the DOI for approval. Standard market policyholders are protected against company insolvency through the state’s guaranty fund, which steps in to offer coverage in the event that a carrier becomes distressed or goes out of business. Standard market carriers generally have a traditional underwriting approach and they prefer to insure lower risk physicians and medical groups.

Non-standard market companies (also known as excess and surplus lines or E&S carriers) are not admitted and therefore are not subject to the same rules and regulations from the DOI. They can set their own rates, offer different terms, and take on business that standard market carriers may shy away from. Although their policyholders are not protected by the guaranty fund, most non-standard market carriers are financially stable and have the backing of reputable reinsurers. They offer physicians a wide variety of coverage solutions when they are not able to find insurance otherwise.

Reasons for the Non-Standard Market

A physician may need to obtain coverage through a non-standard market carrier for any of the following reasons:

·       Claim issues (too many or high payouts)

·       Licensure issues

·       Gap in insurance coverage

·       Alcohol/drug issues

·       High-risk procedures

·       Practicing in a high-risk area

How to Access the Non-Standard Market

In order to write a policy with a non-standard market carrier, a broker or agent will have to show “diligent effort” in placing the business in the standard market before they can access the secondary market. Usually this means obtaining at least 3 declinations in order to demonstrate to the non-standard carrier that the insured does not qualify for other insurance. The coverage that is issued through non-standard carriers is generally more limited in nature. For example, most non-standard carriers do not offer Occurrence coverage (only Claims-Made) and they typically have a hammer clause (the policyholder does not get consent to settle claims). Every carrier has slightly different policy provisions, so it is important to work with a knowledgeable malpractice agent to understand the differences between each coverage option.

Transitioning Back to the Standard Market

For most providers, coverage in the non-standard market is temporary and is seen as a “rehab” period while a provider gets back on their feet after an unfortunate event (a series of bad claims, a substance abuse issue, etc.). Most standard market carriers want to see at least 5 years with no claim activity and a demonstration of compliance before they are willing to reconsider a doctor for coverage. When a provider is able to transition back into the standard market, they will generally have to start over in their coverage; meaning they will have to obtain Occurrence coverage or a 1st Year Claims-Made policy – prior acts are usually not allowed. Expect to purchase tail coverage from the non-standard carrier that you were insured with before.  

The Importance of Using an Agent

For providers in the non-standard market, it is incredibly important to have a knowledgeable malpractice insurance agent working with you. Your agent can do the legwork to assess the market for you on an annual basis to determine what your real options are and obtain the necessary declinations, etc. to get you access to the non-standard market or renew your coverage. If/when it becomes possible for you to move out of the secondary market and back into the standard market, an agent can help ease the transition and help you find a suitable option for your new malpractice coverage going forward.

Taking a Leave of Absence – Key Malpractice Considerations

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From time to time, it may become necessary for a physician to take a leave of absence from their medical practice. It could be due to an illness, maternity leave, military leave, going back for additional training, or simply taking an extended vacation. Regardless of the reason why, it’s important for you to plan ahead and make the necessary arrangements with your practice for your time away. So what should you do with your malpractice insurance while you’re gone? There are ways to accommodate your time away while still ensuring that you are protected.

Suspend Coverage

Most malpractice insurance carriers have options for you to suspend coverage temporarily when you will be gone due to health concerns, maternity leave, military leave, etc. Suspensions are usually offered when the anticipated leave is greater than three months but less than one year. Leave of absence requests do have to be approved by the insurance carrier, so make sure that you plan ahead and request the suspension well in advance of your departure (as much as possible). If you plan on being gone for longer than a year, the insurance carrier will likely not grant you a suspension and you will have to consider other options.

Cancel Coverage

If you will be gone from practice for more than a year, or if your return date is unknown, it may be better for you to simply cancel your coverage and re-apply later. If you have an Occurrence policy, this is easy to accomplish, since there is no concern with tail coverage. If you have a Claims-Made policy, however, you will need to work with your agent to discuss the possible options for securing tail insurance before you leave. Tail insurance costs range from 1-2 times an annual premium, depending on how long you’ve carried the coverage. For more information on Claims-Made versus Occurrence, read our in-depth blog article HERE. Or for more information on tail insurance, read THIS blog.  

Locum Tenens

If you will be gone for a shorter period of time, you can have a qualified physician fill-in for you while you are away. A locum tenens physician is a “placeholder” or one who temporarily works in place of the regular physician when they are absent. Often, a physician’s medical malpractice insurance policy affords them a set number of free locum coverage days per year. This means that a locums physician can be endorsed onto their policy at no charge, and that locums provider would be covered in the event that a claim occurred resulting from services rendered while they were working for the insured physician. Most insurance companies will require underwriting approval before they allow a locums physician to be endorsed onto the policy, so plan ahead and make sure your locums physician is approved and coverage is in place before you leave.

Part-time Coverage

If suspension, locum tenens, or cancellation are not ideal solutions for you, you can keep your malpractice insurance policy active while you are away, but drop coverage down to minimal hours to reduce the cost. This option will require carrier approval, but it is a way to maintain ongoing coverage at a more affordable rate. Some providers like this option because it also allows them to return to work on occasion, whereas a suspension or cancellation does not. It does, however, mean that you will continue paying a premium - as opposed to a suspension or cancellation, which stops the premium payments.

Conclusion  

There are many options for providers to consider when they are preparing for a leave of absence from their medical practice. If you are a physician, talk to your malpractice insurance agent well in advance of requesting the leave of absence (as much as possible) so that you know what your options are and can plan accordingly. If you are a practice administrator, talk to your agent to understand how each leave of absence request is handled so that your employee handbook aligns with the requirements and rules of your specific malpractice insurance carrier.

 

Medical Malpractice Statute of Limitations: 2 Frequently Overlooked Items

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Most civil claims are governed by statute of limitations laws, which limit the amount of time a plaintiff has to file a lawsuit against another party. Under a standard statute of limitations deadline, the victim of medical malpractice has a certain number of years (typically 2-6, depending on the state) to file a suit. If the plaintiff does not file a lawsuit within this deadline, they lose the right to sue for medical malpractice relating to the incident in question. There are, however, a few exceptions to this rule that are often overlooked by healthcare providers.

The Discovery Rule

The Discovery Rule is used to extend the reporting time in instances when the injury is not immediately known. If, for example, a surgeon forgets to remove a sponge after a surgery, the patient may not know immediately why they are suffering from certain symptoms. Or, if a doctor did not promptly diagnose a condition like cancer, the patient may not realize the misdiagnosis for many years. The statute of limitations “clock” does not begin, then, until the patient discovers or reasonably should discover the injury.

The Minor Rule

The Minor Rule is used to extend the reporting time for cases involving children. In most states, the statute of limitations “clock” does not start until the minor child turns 18. In these instances, minors or their parents or legal guardians have an extended period of time in which they can bring a suit against the healthcare provider.

Malpractice Tail Insurance Considerations

Statute of limitations questions often arise when a medical provider is about to buy tail insurance. It can be tempting to consider buying a limited tail or possibly waiving tail insurance altogether when you see the price tag. Tail insurance can be limited or unlimited. It could be a 1-year tail (giving you only 1 additional year of coverage), 2 years, 3 years, 10 years, or an unlimited tail. Rates will be different depending on the length and amount of coverage.

Don't make the mistake of assuming you have no risk because the "clock has run out". Talk to your medical malpractice agent to find out how the discovery rule and the minor rule may affect your long-term professional liability risk.

Malpractice Insurance Considerations for Telemedicine Providers and Groups

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The term telemedicine refers to the remote delivery of healthcare services. This growing area of medicine allows physicians to use telecommunication and information technology systems to provide care from a distance. Patients can see a doctor for diagnosis and treatment without having to wait for an appointment and they can consult a physician from the comfort of their own home. Hospitals and medical groups can also contract with telemedicine companies to outsource cases and provide round-the-clock staffing for critical work (teleradiology, etc.). But while telemedicine brings many benefits to modern medicine, it also brings new risks and legal considerations.

Consider these key medical malpractice issues for telemedicine providers and groups:

1.       Don’t assume that your current malpractice insurance policy is sufficient  

Most employed physicians’ malpractice insurance policies are limited in scope & duty. This means that your policy only covers you for claims related to the work that you do for that employer. If the incident that led to a complaint falls outside the scope of your job description or falls within a policy exclusion, you may not have coverage. If you are looking to add telemedicine to your current policy, talk to your malpractice insurance agent to find out if you can add coverage or if you need to secure separate insurance.

2.       Seek out a carrier that can accommodate multiple states

Telemedicine patients are often in different locations than the treating physician – a different city, state, or even country. Consider your scope of practice and what areas you plan to provide services in, then work with your malpractice insurance agent to obtain coverage with a company that can accommodate multiple states. Many carriers have national reach or at least large regional territories. Talk to your agent to find the coverage solution that will grow with you as your telemedicine practice expands.

3.       Make sure your malpractice policy limits are sufficient

Since telemedicine providers often need coverage for multiple states, it is important to know what malpractice limits are appropriate to carry in each area. Some states have Patient Compensation Funds or other programs that require specific enrollment and their limit structures are slightly different. Talk to a knowledgeable malpractice insurance agent to determine what level of coverage is appropriate to carry in each state.

4.       Consider the policy form that is right for you

When considering the type of malpractice insurance coverage that is right for your telemedicine practice, be cognizant of tail insurance or other hidden costs that may affect you. For example, if you are a provider working in 10 states, 1 of which is a higher-risk area, and you decide to stop seeing patients in the higher risk area after a few years, your malpractice insurance carrier may require you to buy tail insurance to close out that exposure. Keep this in mind as you talk to your agent about the states that you want to work in and plan accordingly. Occurrence coverage, although more expensive, is often a good solution for telemedicine policies, since it provides more flexibility (and no tail insurance).

5.       Seek out risk management education that is unique to the discipline of telemedicine

Telemedicine presents some unique risks that require education and ongoing compliance. At every step of the virtual healthcare process, adverse events may occur, including diagnostic errors, technical glitches, state-specific legal intricacies, and patient/client privacy and security violations. Most of the malpractice insurance carriers that specialize in telemedicine coverage offer courses to help providers learn how to reduce risk in their practice, but there are excellent outside resources, as well. If you are considering adding telemedicine to your practice or if you are already doing telemedicine, be sure to proactively seek out risk education and utilize the (often free) resources that are available to you.

Need a quote for telemedicine coverage? Or have additional questions on this topic? Contact us today!  

The Malpractice Insurance Dictionary

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Like most industries, the medical malpractice insurance world consists of a lot of acronyms, confusing terms, and other jargon that can make it hard to understand - so we here to simplify things for you. Here are some of the most common terms used in the malpractice industry and their basic definitions.

Accident - an unfortunate incident that happens unexpectedly and unintentionally, typically resulting in damage or injury.

Actuary - business professional who compiles and analyzes statistics and uses them to calculate insurance risks and premiums.

Admitted Company - an insurance company licensed to do business in a state(s), but domiciled elsewhere.

Agent - an individual who sells, services, or negotiates insurance policies either on behalf of a company or independently.

Aggregate - the maximum dollar amount or total amount of coverage payable for a single loss, or multiple losses, during a given policy period.

Allocated Loss Adjustment Expenses (ALAE) - an estimate of the settlement associated with a claim(s).

Arbitration - a binding dispute resolution tactic whereby a third party (arbitrator) with no interest in the outcome intercedes.

Broker - an individual who receives commissions from the sale and service of insurance policies. These individuals work on behalf of the customer and are not restricted to selling policies for a specific company.

Captive Agent - an individual who sells or services insurance contracts for a specific insurer.

Captive Insurer - an insurance company that is wholly owned and controlled by a parent organization; its primary purpose is to insure the risks of its owner(s).

Certificate of Insurance (COI) - a document used to provide verification of insurance and usually contains information on types and limits of coverage, insurance company, policy number, named insured, and the policy effective dates.

Chartered Property Casualty Underwriter (CPCU) - a professional designation awarded by the American Institute of Property and Casualty Underwriters to persons in the property and liability insurance field who pass a series of exams in insurance, risk management, economics, finance, management, accounting, and law.

Claim - a request made by the insured for insurer remittance of payment due to loss incurred and covered under the policy agreement.

Claims-Made Policy - A type of insurance that provides coverage when both the alleged incident and the claim happen during the policy period.

Class Rating - a method of determining rates for all applicants within a given set of characteristics such as personal demographic, specialty, or geographic location.

Combined Ratio - an indication of the profitability of an insurance company, calculated by adding the loss and expense ratios.

Commission - a percentage of premium paid to agents by insurance companies for the sale of policies.

Credit - a discount that reduces the premium based on a favorable experience or other differentiating factor.

Declaration Page (or dec page) - the front page (or pages) of a policy that specifies the named insured, address, policy period, location, policy limits, and other key information.

Direct Writer - an insurance company that sells policies to the insured through salaried representatives or exclusive agents only

Direct Written Premium - total premiums received by an insurance company.

Dividend - a refund of a portion of the premium paid by the insured from insurer surplus.

Domestic Insurer - an insurance company that is domiciled and licensed in the state in which it sells insurance.

Earned Premium - the premium collected by an insurance company for the portion of a policy that has since expired.

Earned But Not Reported (EBNR) - premium amount insurer reasonably expects to receive for which contracts are not yet final and exact amounts are not definite.

Effective Date - date at which an insurance policy goes into force.

Endorsement - an amendment or rider to a policy adjusting the coverages and taking precedence over the original contract.

Expense Ratio - percentage of premium income used to gain and service policies; calculated by subtracting related expenses from incurred losses and dividing by written premiums.

Experience Rating - rating approach where a group is rated entirely on the basis of its own individual claim performance.

Exposure - risk of possible loss.

Guaranty Fund - administered by a U.S. state to protect policyholders in the event that an insurance company defaults on benefit payments or becomes insolvent.

Hard Market - a market characterized by high demand and low supply.

Incurred But Not Reported (IBNR) - claims that have occurred but the insurer has not been notified of them at the reporting date. Estimates are established to book these claims.

Indemnity - a general legal principle related to insurance that holds that the individual recovering under an insurance policy should be restored to the approximate financial position he or she was in prior to the loss.

Independent Agent - an insurance agent that sells insurance policies provided by several different insurance companies, rather than a single insurance company. An independent agent receives commissions for the policies that he or she sells, and is not considered an employee of a specific insurance company.

Independent Contractor - an individual who is not employed for a company but instead works for themselves providing goods or services to clients for a fee.

Insurable Interest - when an insured person derives a financial or other kind of benefit from the continuous existence, without repairment or damage, of the insured object.

Insured - party(ies) covered by an insurance policy.

Insurer - an insurer or reinsurer authorized to write property and/or casualty insurance under the laws of any state.

Joint Underwriting Association (JUA) - a loss-sharing mechanism combining several insurance companies to provide extra capacity due to type or size of exposure; some states have JUAs to offer insurance to high-risk providers.

Lapse - termination of a policy due to failure to pay the required renewal premium.

Liability - the state of being responsible for something, especially by law.

Limits - maximum amount of coverage provided under an insurance policy.

Loss - physical damage to property or bodily injury, Including loss of use or loss of income

Loss Adjustment Expense (LAE) - expected payments for costs to be incurred in connection with the adjustment and recording of losses. Can be separated into (Allocated Loss Adjustment Expense) and (Unallocated Loss Adjustment Expense) for ratemaking purposes.

Loss Frequency - incidence of claims on a policy during a premium period.

Loss Ratio - the percentage of incurred losses to earned premiums.

Loss Reserve - the amount that insurers set aside to cover claims incurred but not yet paid.

Loss Severity - the amount of a loss in financial terms.

Losses Incurred - Includes claims that have been paid and/or have amounts held in reserve for future payment

Malpractice - alleged misconduct or negligence in a professional act resulting in loss or injury.

Medical Malpractice - insurance coverage protecting a licensed health care provider or health care facility against legal liability resulting from the death or injury of any person due to the insured's misconduct, negligence, or incompetence, in rendering or failure to render professional services.

Medical Professional Liability - insurance coverage protecting a licensed health care provider or health care facility against legal liability resulting from the death or injury of any person due to the insured's misconduct, negligence, or incompetence in rendering professional services. Also known as Medical Malpractice.

Minimum Earned Premium - the smallest amount of money an insurance company is willing to accept for writing a business insurance policy.

Mutual Insurance Company - a privately held insurer owned by its policyholders, operated as a non-profit that may or may not be incorporated.

Named Insured - the individual defined as the insured in the policy contract.

Negligence - failure to exercise reasonable consideration resulting in loss or damage to oneself or others.

Non-Admitted Insurer - insurance company not licensed to do business within a given state.

Occurrence Policy - a type of insurance that provides coverage for incidents that “occur” during the policy period, regardless of when the claim is reported to the carrier.

Policy - a written contract ratifying the legality of an insurance agreement.

Policy Period - time period during which insurance coverage is in effect.

Premium - Money charged for the insurance coverage reflecting expectation of loss.

Producer - an individual who sells, services, or negotiates insurance policies either on behalf of a company or independently.

Rate - value of insured losses expressed as a cost per unit of insurance.

Registered Professional Liability Underwriter (RPLU) - a designation from the Professional Liability Underwriting Society (PLUS); considered to be the only professional designation exclusively for people in the professional liability industry. Courses provide a broad, basic understanding of the key professional liability disciplines.

Reinsurance - a transaction between a primary insurer and another licensed (re) insurer where the reinsurer agrees to cover all or part of the losses and/or loss adjustment expenses of the primary insurer. The assumption is in exchange for a premium. Indemnification is on a proportional or non-proportional basis.

Reinsurer - company assuming reinsurance risk.

Reserve - A portion of the premium retained to pay future claims

Retroactive Date - generally the date from which you have held uninterrupted professional liability insurance coverage; often the inception date of the policy.

Risk - Uncertainty concerning the possibility of loss by a peril for which insurance is pursued.

Risk Retention Group - group-owned insurer organized for the purpose of assuming and spreading the liability risks to its members.

Self-Insurance - type of insurance often used for high frequency low severity risks where risk is not transferred to an insurance company but retained and accounted for internally.

Soft Market - a buyer's market characterized by abundant supply of insurance driving premiums down.

Stock Insurance Company - business owned by stockholders.

Substandard Risk - (impaired risk) risks deemed undesirable due to a variety of factors, i.e. claim activity, high-risk procedures, licensure issues, or other concerns.

Surplus Line - specialized property or liability coverage available via non-admitted insurers where coverage is not available through an admitted insurer, licensed to sell that particular coverage in the state.

Term - period of time for which policy is in effect.

Unallocated Loss Adjustment Expense (ULAE) - loss adjustment expenses that cannot be specifically tied to a claim.

Underwriter - person who identifies, examines and classifies the degree of risk represented by a proposed insured in order to determine whether or not coverage should be provided and, if so, at what rate.

Underwriting - the process by which an insurance company examines risk and determines whether the insurer will accept the risk or not, classifies those accepted and determines the appropriate rate for coverage provided.

Unearned Premium - amount of premium for which payment has been made by the policyholder but coverage has not yet been provided.

Vicarious Liability - a party is held responsible not for its own negligence, but for the negligence of another.

Malpractice Insurance for Allied Providers

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"Plaintiff attorneys only go after the doctors… not the nurses." Have you heard this before? While that may have been the case in the past, today's healthcare liability landscape is changing and the risk for allied providers is increasing more and more. As the scope of practice for midlevels continues to expand, the liability grows, as well.

So what’s the best way to insure your Nurse Practitioner, Physician's Assistant, RN, Aesthetician, etc? And what options do you have if you're a midlevel provider working independently? In this article we’ll address these questions and more to help you understand malpractice insurance for allied providers.

Coverage under the Supervising Physician

Most malpractice insurance carriers will allow Registered Nurses, Medical Assistants, Aestheticians, Therapists, X-Ray/Ultrasound/Surgical Techs, and other medical staff to be covered under their supervising physician at no cost; however Nurse Practitioners, Physician’s Assistants, CRNAs, Midwives and other providers with a larger scope of practice are often excluded.

While it’s beneficial to have this shared limit option available, keep in mind that shared limits means just that – the policy limits are shared among everyone under the policy. So, if a physician has a $1M policy limit and a claim names him/her, their RN, the medical assistant, and their receptionist, everyone shares the $1M in coverage.  

This shared limit option also generally limits the coverage to work done on behalf of the employer; so a RN would not be covered for any moonlighting or outside work – only that work done within the scope of their duties for the supervising physician or employer.

When an allied provider leaves a practice, they usually do not need to purchase tail insurance, since they were sharing the policy with their supervising physician; however, it is the supervising physician’s duty to maintain continuous coverage and take care of the tail insurance at some point in the future (unless it is Occurrence coverage). Talk to your malpractice insurance agent to find out what tail obligations you have with your policy.

Pros: No cost; Easy way to cover most of your staff

Cons: Only certain types of allied providers can be covered; Shared limits; Tail considerations

Coverage under the Employer/Corporation

Corporate malpractice insurance coverage provides a wider range of protection for allieds in a group. Most malpractice insurance carriers allow all classes of allied professionals to be insured under the corporate policy. This is beneficial to the physicians, because they are no longer sharing their individual policy limits with their staff; but rather, it provides a separate set of limits to cover the entity itself and all non-physician staff working under it.

Corporate malpractice insurance costs are nominal. For a single physician practice, the corporate malpractice insurance is generally 10% of their individual premium. For groups, the corporate cost is around 10% of the top 5 physicians’ premiums combined (often a maximum premium threshold applies).

The corporate malpractice insurance policy extends coverage on a shared limits basis and coverage is generally limited to the acts done within the scope of employment. When an allied provider leaves a practice, they typically do not need to purchase tail insurance, since they were sharing the policy with their employer; however, it is the employer’s duty to maintain continuous coverage and take care of the tail insurance at some point in the future (unless it is Occurrence coverage). Talk to your malpractice insurance agent to find out what tail obligations you have with your policy.

Pros: Carves out the allied providers so no eroding of the physician’s policy limits

Cons: Shared limits; Tail considerations; Cost (although minimal)

Individual Coverage

It is also possible for allied providers to secure their own individual malpractice insurance. This option provides more coverage than a shared limit option, since the individual provider has a policy all to themselves. The group may control the policy or the individual provider may choose to pay for it on their own. An employer-controlled policy often means that the coverage will be limited to only the work done for that employer. Midlevel providers that work as independent contractors, 1099 employees, or locums may want to carry their own policy to have the flexibility of managing their own coverage and working wherever they want.

Individual policies will have a premium cost, although there are often discounts available for those working part-time.

Pros: Separate coverage; No eroding limits for physician, corporation or other providers in the group; Allows provider to go anywhere and work where they want; Usually one policy can cover all activities

Cons: Cost

What Coverage Option Is Right for You?

So how do you decide which coverage option is right for you? It depends on several factors including the state you’re practicing in, budget, and your risk tolerance.

For small, start-up practices, shared limits coverage is common. It’s an economical way to extend coverage to the midlevel providers in the group, while the number of exposures is relatively low. As the practice grows and expands, however, it is wise to consider separate coverage options to spread out the risk so not to exhaust limits. It’s also important to be cognizant of the policy limits, particularly for shared limits policies. A corporate malpractice insurance policy sharing $1M in limits is very different than a corporate malpractice insurance policy sharing $200,000 in limits.

State nuances, hospital requirements, and other factors may also affect the type of coverage option that you’ll select. In Indiana, for example, the Patient’s Compensation Fund requires that all Independent Ancillary Providers (IAPs) carry their own individual malpractice insurance, unless they are employed by a hospital or nursing home. This includes Dentists, Psychologists, Podiatrists, Optometrists, Nurse Practitioners, Nurse Midwives, Certified Registered Nurse Anesthetists, Physician’s Assistants, and Clinical Nurse Specialists. These providers cannot share limits with a physician or a corporation. They must be separately insured.

Deciding on the right form of malpractice coverage for allied healthcare providers may seem difficult, but there are experts available to help you talk through options. A knowledgeable malpractice insurance agent can simplify the process for you and explain all available coverage options so that you can find the malpractice solution that’s right for you.

Malpractice Insurance Considerations for Fellows

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After 4 years of undergraduate studies, 4 years of medical school, and 3-5 years of residency training, a doctor may choose to finish up their studies by completing a fellowship program. During a fellowship, physicians and surgeons are given the opportunity to focus on their specialty in a more in-depth capacity. Providers looking to deepen their knowledge, sub-specialize, or gain further experience look to fellowships for more hands-on training before beginning their medical practice.

When it comes to medical malpractice insurance and coverage for fellows, there are a few key things to keep in mind.

Rates are typically discounted

Fellowship malpractice insurance rates are often discounted. Although fellows work more independently than a resident or medical student, they are still mentored and supervised by another, more experienced physician or surgeon. Typically, the fellowship program will provide malpractice insurance for you, but in the event that you must obtain your own policy, rates are generally 50-75% of what they would cost normally. Contact a knowledgeable malpractice insurance agent if you need to get a quote.

What kind of malpractice insurance should you get?

It’s important for you to know what type of malpractice insurance policy is being provided for you – Occurrence or Claims-Made?  Claims-Made coverage triggers based on when the claim is made against the provider; so a fellow must carry the insurance while they are actively practicing and then obtain tail insurance (or nose/prior acts coverage from a new carrier) after the policy is cancelled to continue the coverage for future filed claims. Occurrence coverage triggers based on when medical incident actually occurred, even if the claim is filed after the policy has been cancelled.  Tail insurance is not necessary for Occurrence policies. Read more about Occurrence vs. Claims-Made coverage here.

If your fellowship program is providing a Claims-Made policy for you, it’s important to find out who is responsible for purchasing the tail coverage when you finish training.  This is an often-overlooked item that needs to be clarified early so there is no confusion when you leave.  Tail insurance can be expensive (typically 1.5 – 2 times an annual premium), so you’ll need to be prepared for that expense if it will be your responsibility.

Are you covered on a shared-limits basis? Or do you have your own individual limit?

Be sure to understand how much coverage you have in the event that you are named in a medical malpractice claim.  If you are covered on a shared limit policy, that means that you (and all the other named individuals) will be sharing the same policy limit, which potentially reduces the amount of coverage available to you.  It is generally recommended that fellows have their own individual policy limits, unless the shared limits are high enough to comfortably/adequately protect all parties.  

Is coverage limited? What about moonlighting?

Most fellowship programs’ malpractice insurance policies are not written on a broad form; they are limited scope & duty policies. This means that the policy only covers you for claims related to the work that you do within the scope of your fellowship training for that particular program. If the incident that led to a complaint falls outside this scope, you may not have coverage.

Many fellows look to moonlighting as a way to supplement their income while they are finishing up their training. If this is something you are interested in doing, you will need to secure your own separate malpractice insurance. Many carriers offer moonlighting policies or part-time malpractice insurance policies at discounted rates, so obtaining additional coverage is generally affordable.  

Keep good records

It’s wise to keep a copy of your certificate of insurance or policy declaration page, showing your coverage details throughout fellowship. You will need this information for future malpractice applications, credentialing forms, or in the event that you need to report a claim. This is a best-practice for you throughout your medical career, so start a good record-keeping system early on.

What happens after you finish your fellowship program?

After fellowship training, you’ll be on to the real world – whether that’s private practice, joining a group, working for a hospital or university, etc. Again, you’ll be in a situation where you may have your malpractice insurance provided for you, or you may have to obtain your own. It may be helpful to refer back to our guide on questions to ask before starting private practice.

If you will be obtaining your own malpractice insurance, most carriers will offer a discounted premium for at least your first year in private practice (many offer a discount for the first 2-3 years). Be sure to work with a knowledgeable malpractice insurance agent so that you can compares policies, rates, and other key factors to help you find the coverage that’s right for you.

Understanding the Indiana Medical Malpractice Act

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Medical malpractice laws can vary widely from state to state, particularly as it relates to statutes of limitations, the legal process, liability, and damages.  Luckily for our Hoosier healthcare providers, Indiana is one of the best states to practice medicine in.

The Indiana Malpractice Cap on Damages

In 1975, Indiana was the first state in the nation to implement malpractice reform via the Medical Malpractice Act (MMA), a seminal feature of which is the Patient’s Compensation Fund (PCF).  The MMA offers protection to both patients and healthcare providers and has helped improve malpractice insurance rates, quality of coverage, and patient access to care.

The MMA governs malpractice claims against “qualified providers” in the state of Indiana. To become “qualified”, a health care provider must file a proof of financial responsibility and pay a surcharge assessed by the Indiana Department of Insurance that goes to the Indiana Patient’s Compensation Fund. The PCF is a state-sponsored excess insurance program that helps pay claims to benefit injured patients in the state.

One of the most important aspects of the MMA is the cap, or limit, on the amount of damages that can be recovered in a medical malpractice lawsuit.  The cap has been raised twice since 1975 and, pursuant to legislation passed in 2016, will see two increases by July 1, 2019.  As of July 1, 2019, providers will need to carry a $500,000 primary limit and the PCF will provide an excess limit of $1,300,000. The Indiana malpractice cap will be set at $1,800,000. As long as a provider carries the necessary limits, he/she will not have any personal exposure. Example: If a malpractice claim in Indiana pays out $1,000,000, the provider’s underlying insurance will pay the first $500,000 and the PCF will pay the remaining $500,000.

The Indiana Medical Review Panel

Under the MMA, all malpractice claims against a qualified provider must be reviewed by a medical review panel before proceeding to court (unless they are valued at $15,000 or less). The purpose of the panel is to review the details of the case and render an opinion as to the merits of the complaint. This process mitigates frivolous claims or quick payouts and allows only those with actual merit to proceed to court.

The parties work with the medical review panel chairman (who is an independent lawyer) to select the members of the panel, which typically consist of 3 doctors of same or similar specialty to the provider involved. Occasionally, nurses or mid-level providers will serve on the panel, but only if the case is relevant to their specialty. The panel members review the details of the complaint and within 180 days, must render an opinion on the complaint - Malpractice, No Malpractice, or Material Issue of Fact (not enough information to render a decision).

If a plaintiff chooses to move forward with filing a medical malpractice lawsuit, the panel's report is admissible in court, but it won't be considered conclusive when it comes to the health care provider's liability or the nature and extent of the patient's injuries. Expert witnesses are key to both the defense and plaintiff sides, as they seek to show whether or not the standard of care was met in the case. Panel members can be called to testify at court and can serve as expert witnesses for either side of the case.

If you practice in the state of Indiana, it is extremely advantageous to become a qualified healthcare provider so that you can enjoy the protection (and benefits) of the MMA. Talk to a knowledgeable malpractice insurance agent to make sure that you’re qualified today.  

Malpractice Insurance Considerations for Locum Tenens Providers

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Locum tenens is a Latin phrase that means “to hold a place”. A locum tenens physician is a “placeholder” or one who temporarily works in place of the regular physician when they are absent. Locum tenens physicians play an important role in healthcare because they allow for continuity of patient care when a practice is short-staffed or when a physician is gone for vacation, illness, sabbatical, training, etc.

Locum tenens can be a valuable experience for physicians all throughout their career. A new grad can try out different types of practices in different locations to see what they like before committing to a full-time position. Some physicians enjoy the opportunity to fill-in for a friend from medical school/residency or help a colleague who trusts them with their patients. Physicians who experience a sudden job loss or who may be looking to bridge the gap can work as locums to make some extra money. Physicians who are later in their career can use locum tenens to begin scaling back their practice or work locums after retiring to continue practicing on a limited basis.

Before you jump into your first assignment, however, be sure to consider the medical malpractice insurance implications of being a locum tenens physician.

Working for a Locum Tenens Placement Agency

If you are working through a locum tenens placement organization, that company will likely provide your medical malpractice insurance. Be sure to ask about the coverage that is being provided for you (what company, what limits, what policy type, etc.). If they are providing you with Claims-Made coverage, ask about tail insurance so that you’re clear on who will be responsible for purchasing it after you leave. If it’s not already spelled out in your employment contract, make sure you get it in writing so there is no confusion when the time comes. It’s also wise to keep a copy of your certificate of insurance or policy declaration page for each year that you work for the locums agency, so that you have record of the insurance that was provided for you during that time. You will need this information for future malpractice applications, credentialing forms, or in the event that you need to report a claim.

Filling in for a Friend/Colleague

If you’re not working for a locums agency, you can still work as a locum tenens physician on your own. The most common situation is filling in for a friend or colleague while they’re gone. Often, a physician’s medical malpractice insurance policy affords them a set number of free locum coverage days per year. This means that a locums physician can be endorsed onto their policy at no charge, and that locums provider would be covered in the event that a claim occurred resulting from services rendered while they were working for the insured physician. Most insurance companies will require underwriting approval before they allow a locums physician to be endorsed onto the policy.

If it’s not possible for the locums physician to be covered under the insured physician’s policy (due to state requirements, availability, or other issues), they can request their own individual coverage. Often insurance carriers are willing to write short-term policies for only the period of time in which the locums physician will be filling in, as opposed to the typical annual policy.

The Hidden Risks with Tail Insurance

As mentioned above, it’s important for locums physicians to learn about their tail requirements as part of their contract negotiation with a locums agency; however, there are other (often hidden) risks for locums physicians to be aware of. Before you fill in for your friend or colleague, be sure to check the tail requirements if the insured physician carries a Claims-Made medical malpractice insurance policy. As long as the primary physician keeps continuous coverage, there will be no issue with coverage for the locums provider. But if he/she cancels coverage, fails to pay, or drops coverage for any other reason and then fails to purchase a tail policy or secure ongoing coverage, there may not be coverage for the locums physician. Be sure to discuss this risk with the physician that you will be filling in for and get a statement in writing, if necessary, to make sure you will be protected.

Another hidden tail insurance risk for locums physicians affects those providers who have retired and then want to go back to work at a later time. As discussed in a previous blog post, many carriers offer free tail insurance for providers who are fully retiring from the practice of medicine. If a provider retires, earns their free tail, and then wants to go back to work (as a locum tenens physician or otherwise), the previously offered free tail can potentially be voided. Providers with Occurrence coverage will not have this issue, but those on Claims-Made policies should ask their insurance agent or carrier before jumping back into practice after retiring.

Locum tenens work can be a fun, fulfilling way to earn some additional income, travel, and gain more experience and knowledge, but before you jump in, make sure you’re asking the right questions. Talk to a knowledgeable malpractice insurance agent to make sure you’re prepared and protected as you venture into the world of locum tenens.

Malpractice Insurance Tips for Moonlighting Physicians

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Moonlighting occurs when an individual holds a second job outside of normal working hours. While moonlighting is not unique to the medical profession, it is common among residents and new physicians as a practical way to make additional income and continue honing their skills. Moonlighting is also becoming more common among career physicians; particularly those who work for hospitals or large health systems/medical groups. Many physicians see moonlighting as an opportunity to start a side business or begin diversifying their work to provide options for the future.

There are several key issues to consider from a malpractice perspective. Here are 4 tips for you to think about before you proceed with a moonlighting opportunity:

1.       Check your malpractice insurance policy to see how you’re covered

Most employed physicians’ malpractice policies are not written on a broad form; they are limited scope & duty policies. This means that your policy only covers you for claims related to the work that you do for that employer. If the incident that led to a complaint falls outside the scope of your job description or falls within a policy exclusion, you may not have coverage.

If you provide professional medical services outside the scope of your employment, even if it’s as a volunteer or a favor to your neighbor, you need to have a separate policy in order to be covered. Good Samaritan laws protect you only in emergency situations. Many carriers offer moonlighting policies or part-time malpractice insurance policies at discounted rates, so obtaining additional coverage is generally affordable.  

2.       Review your employment contract & talk to you administrator

Since moonlighting jobs are in addition to your primary work, you will need to obtain approval from your group/employer before you begin. Take the time to review your employment contract to see if there are any conditions that could affect outside work activity. For example, make sure that you can retain all compensation for your moonlighting. Some contracts state that any remuneration the employee receives from physician offices, facilities or organizations belongs to the employer. Talk to your practice administrator to see what your options are and consider all potential restrictions before taking the time to look for a job.  

3.       Compare costs + coverage and choose the best malpractice policy for you

As mentioned above, most employed physicians’ malpractice policies are limited to coverage for work done for that employer specifically. For this reason, most moonlighting physicians need to secure a second malpractice insurance policy. It's usually very simple and inexpensive to obtain a moonlighting policy to cover you for work that you do outside of your full-time job. While most insurance policies run for a full year, ask about short-term policy options (which are ideal for assignments that only last a few weeks or months) and part-time policy options. Also consider which policy type is best suited for you – Claims-Made or Occurrence. Remember that Claims-Made coverage requires a tail upon cancellation, so do the math to determine the most cost-effective solution for you.

4.       Keep good records

Record-keeping is never a fun task, but it's an important one - especially for moonlighting physicians. Keep record of your outside work activities, including where you worked, what dates you worked, and what malpractice insurance you carried. Ideally, you’ll want to keep a copy of your Certificate of Insurance (or a declaration page) for every malpractice insurance policy you have. While it might seem like a nuisance in the moment, you'll be glad that you kept good records when you need to recall your history for credentialing or report a claim down the road.

If moonlighting is something that you’re considering, be sure to talk to a knowledgeable malpractice insurance agent to help you compare coverage options and find the right fit for your unique situation.

Understanding Malpractice Policy Limits

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Medical malpractice policy limits describe how much money an insurance company will pay on your behalf in the event of a claim. The policy limit consists of 2 numbers, a "per claim" limit and an "annual aggregate" limit. If a provider had a malpractice insurance policy with $1,000,000/$3,000,000 limits, he/she would have a $1,000,000 limit per claim and a $3,000,000 aggregate limit for the year. So how, exactly would that work?

Example #1:

A surgeon has 3 claims in a year, each paying $500,000. Is he covered?

Yes, all 3 claims would be paid. $500,000 is below the $1,000,000 per claim limit and the total for the year ($500,000 x 3 = $1,500,000) is also below the $3,000,000 aggregate.

Example #2:

A surgeon has 2 claims in a year, the first pays out $1.2M and the second pays out $500,000. Is he covered?

Partially. $1.2M is $200,000 higher than the $1,000,000 per claim limit, so the provider will be personally responsible for any amount above the $1M limit. The second claim would be covered, since $500,000 is below the $1,000,000 per claim limit. The sum of both claims falls within the $3,000,000 aggregate limit for the year.

What malpractice limits should I carry?

Depending on your risk tolerance, there are a wide variety of limits of liability available; however, some states have minimum requirements that must be carried. In addition to state requirements, oftentimes hospitals and 3rd party credentialing organizations will require a minimum amount of coverage in order to have privileges.

So how do you choose what limits are right for you? Start by talking to your group/employer to find out what limits your colleagues are carrying. It’s generally recommended that all providers in a group carry the same (or similar) limits. Some malpractice insurance carriers will require the corporation to carry limits that match the highest individual limit within the group, so if everyone carries $1M/$3M limits, but one person carries $2M/$4M, the corporation will have to carry $2M/$4M, as well.

Another consideration for determining proper malpractice policy limits is your geographic area, specialty, and scope of practice. Metropolitan areas are generally more litigious and often have higher claim frequency and severity, so be mindful of that when choosing your limits. Also consider your specialty and any unique attributes within your practice. Are you doing a large number of surgical procedures? More than the average surgeon? Are you doing a lot of mammography reads?  More than the average radiologist?  These types of questions are helpful when discussing options for malpractice policy limits with your insurance agent.

While it’s certainly a risk to carry limits that are too low, it could also be a risk to carry limits that are too high. It’s often speculated that doctors who carry very high malpractice limits are more of a target for plaintiff attorneys, as they’re seen as “deep pockets” with more potential money at stake. This is certainly a risk, so it’s important for providers to carry appropriate limits – not too high, and not too low.

Can I change my malpractice policy limits?

It is possible for you to change your policy limits throughout the course of your career, but be considerate of the type of insurance that you have. With Claims-Made coverage, any changes to your policy limits (higher or lower) will be retroactive; whereas Occurrence limit changes will be done on a go-forward basis (not retroactive). It’s important that you talk to a knowledgeable malpractice agent before making any adjustments to your policy limits to understand potential long-term impacts to your coverage.

Be sure to review your policy limits regularly to ensure they continue to meet state and 3rd party requirements and that they are at an appropriate level for your unique practice setting. A knowledgeable malpractice insurance agent is a valuable resource, as they help monitor market changes and can make suggestions if/when you may need to consider adjustments to your coverage along the way.

Tail Insurance FAQs

Answers to the most common questions regarding tail coverage in medical malpractice insurance

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In last week’s blog post, we discussed tail insurance very broadly. As previously mentioned, tail insurance is required upon cancellation of a Claims-Made insurance policy. Since Claims-Made coverage triggers based on when a claim is made against you, the tail policy (also known as an extended reporting period or ERP) extends the reporting period for future filed claims. Essentially, tail coverage provides protection for medical malpractice claims that are reported after your policy is cancelled.

Here are some common questions regarding tail insurance along with answers/thoughts for you to consider.

How is tail premium calculated?

Tail insurance can be a costly expense. Generally, it is 1 ½ to 2 times your annual premium. Every insurance carrier has their own “tail factors” based on their underwriting guidelines and actuarial rules, so you may see a range in tail costs by carrier. A good rule of thumb is to plan for 2x your premium, but you can ask your agent for a quote well in advance of your policy cancellation to get a better idea of what to expect.

There are, however, a few ways in which you may qualify for free tail insurance. Most carriers offer free tail for death, disability, and retirement (usually there is an age minimum). Some carriers offer free tail if you move out of state or if you have been insured with them for a consecutive number of years (Example: free tail after being insured for 10 years, 20 years, etc.). Again, each carrier has their own rules.

How long does my tail cover me?

Tail insurance can be limited or unlimited. It could be a 1-year tail (giving you only 1 additional year of coverage), 2 years, 3 years, 10 years, or an unlimited tail. Rates will be different depending on the length of coverage.  

What limit will I have? Can I increase my limit if I want more coverage?

Your tail policy will be quoted at the same limit as your Claims-Made insurance policy, unless you request otherwise. Most carriers will let you reduce your tail limit (which would save you a bit of money), but it’s generally not advisable to do so; however, most carriers will not let you increase your tail limit – even if you want more coverage. If your policy limits fluctuated during the lifetime of your Claims-Made policy, generally the carrier will only let you obtain a tail policy at the highest limit held within the last 5 years of insurance.

Can I just buy a 2-year tail to cover me until the statute of limitations runs out?

Yes, it is possible for you to buy a 2-year tail, but it may not be wise to do so. Statute of limitation laws vary by state, and although these laws set a time limit on a plaintiff’s right to file a medical malpractice lawsuit, it’s not so simple. There are 2 common exceptions to the law that allow a patient to file a malpractice case beyond the standard window of time: 1) Date of Discovery, and 2) Age of Majority / Issues involving minors.

The first exception allows the statute of limitations to be extended until the patient discovers that he/she was a victim of medical malpractice or reasonably should have discovered the malpractice. The second exception allows for an extension until a minor child reaches the age of majority. In both of these instances, a 2-year tail may not be sufficient time to protect you for any future filed claims.

Do I really need to buy tail, if I've never been sued?

Although we’ve said that tail insurance is “required”, you can make the choice not to buy it; however, your malpractice insurance carrier has a legal obligation to offer it to you. If you choose to forego tail insurance, you are essentially uninsured.

I work for a group/network. Won't they take care of my tail for me?

In an ideal scenario, you have already negotiated the terms of your tail insurance with your employer before signing any employment contract. Hopefully you’ve determined if tail insurance will be required upon your departure from the group and if so, who will be responsible for buying it. If, however, you have not worked this out with your group beforehand, you’ll need to address all of these concerns promptly. If the group will be purchasing your tail insurance for you, be sure to get a copy of the endorsement for your files. Don’t just assume that your tail insurance will be taken care of.

What happens if I just go bare?

If you are uninsured or “go bare”, you are personally responsible for any claims that are filed against you. Consider the fact that not only are you footing the bill for any potential losses, but you are also responsible for claim administration (hiring a TPA or defense attorney, paying court fees and related defense costs, etc.). For most providers, tail insurance offers peace-of-mind after a long, successful career in medicine. It would be unfortunate to take a financial or reputational hit that could have otherwise been prevented.  

Do I have to buy tail every time I switch malpractice carriers?

Usually not. Most malpractice insurance carriers offer prior acts or “nose” coverage, which allows you to carry forward your current policy retroactive date – transferring liability to the new carrier for any potential claims for services provided back to that date. In some instances, you may have to tail out to make the switch (especially if you are switching because you are changing jobs, and your former employer requires that you buy tail) but be sure to ask your agent what your options are.

Can I shop around for tail quotes?

Yes. Many carriers now offer “stand-alone tail” policies, which means they are willing to offer you a tail policy covering you for your prior acts, even if they were not the company that you were originally insured with. Talk to your agent about options for tail to make sure that you are looking at quality coverage options and not just the cheapest price. Tail insurance does not expire and cannot be cancelled by you or the insurance carrier who issues it, so it’s important that you buy from a reputable, financially stable company.

How long do I have to buy it?

Buying tail coverage is a one-time purchase and payment is usually required promptly after your policy cancels. Most tail quotes are only good for 30-60 days and once the quote expires, you cannot have it reissued. It’s important that you plan ahead for the purchase of your tail insurance and begin considering outside finance options, if necessary. If you miss out on the opportunity to buy your tail, talk to you agent about other options. It may be possible to get coverage from the secondary market, but understand that coverage will likely be limited and the price will probably be much higher (if available, at all).

Do you have other questions related to tail insurance? Need a consultation to discuss your own coverage options?

Contact us or call 1-888-512-3447

What’s the Difference Between Claims-Made and Occurrence Malpractice Coverage?

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In the world of medical malpractice insurance, there are two types of coverage available: Claims-Made and Occurrence. It is important that you have a clear understanding of the coverage differences so that you can make an informed decision on which one is right for you. Although it can be a bit complicated, the easiest way to remember the differences is this: The names describe how the coverage is triggered.

Claims-Made coverage triggers based on when the claim is made against youOccurrence coverage triggers based on when the incident actually occurred.

Occurrence Coverage

How it works: An Occurrence policy provides coverage for incidents that “occur” during the policy period, regardless of when the claim is reported to the carrier. The policy will respond to claims that are reported even after the coverage has been terminated, assuming the incident occurred during the time in which coverage was in force; therefore, there is no need for you to buy tail insurance after the policy is cancelled.

Limits: An Occurrence policy provides a separate limit for each year the policy is in force. Its limits “restore” year after year so that claims paid for incidents arising from one policy year do not deplete the limits for other years. Occurrence limits have a “stacking” effect, so 10 years of coverage under a $1M/$3M limit policy would provide you with $10M/$30M in the aggregate.

Pricing: Occurrence premiums are usually 5-10% more expensive than fully mature Claims-Made premiums. The rates are generally flat year-over-year and there is no “stepping up” in rate, as with Claims-Made coverage.

Example: An OB/GYN obtains an Occurrence policy starting on 1/1/2000 with a $1M/$3M policy limit. She renews the policy every year for 10 years at the same limit. On 1/1/2010 she cancels the coverage. On 7/1/2011, a claim is filed for a surgery that she performed on 3/1/2009. She is covered for this claim, even though it was filed after the policy was cancelled because the incident “occurred” during the time period in which she was insured on the Occurrence form. Let’s assume the claim settles for $500,000. How much coverage does she have left?

1/1/2000 – 1/1/2001 = $1M/$3M

1/1/2001 – 1/1/2002 = $1M/$3M

1/1/2002 – 1/1/2003 = $1M/$3M

1/1/2003 – 1/1/2004 = $1M/$3M

1/1/2004 – 1/1/2005 = $1M/$3M

1/1/2005 – 1/1/2006 = $1M/$3M

1/1/2006 – 1/1/2007 = $1M/$3M

1/1/2007 – 1/1/2008 = $1M/$3M

1/1/2008 – 1/1/2009 = $1M/$3M

1/1/2009 – 1/1/2010 = $1M/$2.5M (she still has a $1M per claim limit; but the aggregate has been reduced to $2.5M after the claim settlement – however, notice that none of the previous policy limits have been affected)

Benefits of Occurrence Coverage:

·       Flexibility - No need for tail insurance

·       “Stacking” policy limits

Disadvantages of Occurrence Coverage:

·       Harder to find (not as accessible as Claims-Made)

·       Higher price

·       If the insurer goes out of business, you would have to rely on the Guarantee Fund to cover you, which usually provides lower limits and less than desirable services/defense capabilities.

·       Concerns regarding whether the past policy limits are adequate (inflation)

 

Claims-Made Coverage

How it works: A Claims-Made policy provides coverage when both the alleged incident and the claim happen during the policy period. Each year that the policy is renewed, the coverage period is extended. Once the Claims-Made policy is cancelled, you’ll need to either 1) continue the coverage with a new insurance company who is willing to pick-up your priors acts exposure or 2) obtain tail coverage (also called an ERP - extended reporting period). Tail insurance covers you into the future for any claims made against you for incidents that occurred back to the start of the coverage (the retroactive date). If tail insurance is not purchased, any future filed claims will not be covered – even if the incidents happened during the initial policy period.

Limits: Claims-Made limits do not “stack” as the Occurrence limits do, but rather, they “stretch” to cover the policy period as it extends year after year. After 10 years on a Claims-Made policy with $1M/$3M limits, you will have $1M/$3M limits. However, one advantage to the Claims-Made limit is that if the current level of coverage doesn’t seem sufficient, the limit can be increased and it will be retroactive to the inception of the coverage.

Pricing: Claims-Made premiums are less expensive than Occurrence premiums. The rate starts out very low (since the chances are low that there will be an incident and claim filed within the first year), but the premium “steps up” each year for approximately 5 years. After 5 years, the Claims-Made premium is considered mature, and will remain relatively flat thereafter. Tail insurance is typically 1.5-2 times the mature rate (unless coverage is cancelled before the policy matures; in that instance, the tail rate is less).

Example: An OB/GYN obtains a Claims-Made policy starting on 1/1/2000 with a $1M/$3M policy limit. She renews the policy every year for 10 years at the same limit. On 1/1/2010 she cancels the coverage and buys tail insurance. On 7/1/2011, a claim is filed for a surgery that she performed on 3/1/2009. She is covered for this claim, because she secured tail insurance and the incident occurred during the time period in which she was insured. Let’s assume the claim settles for $500,000. How much coverage does she have left?

1/1/2000 – 1/1/2010 = $1M/$2.5M (she still has a $1M per claim limit; but the aggregate has been reduced to $2.5M after the claim settlement; there is only 1 policy limit available for the entire tail period)

Benefits of Claims-Made Coverage:

·       Lower price, especially in the first 4 years  

·       Accessible

·       Flexibility – Increased policy limits and broadening coverage endorsements are retroactive

·       Less uncertainty about insurer’s financial stability (coverage can be switched to another carrier and prior acts can usually be picked up by another company if the insurer starts to have financial difficulties)

Disadvantages of Claims-Made Coverage:

·       Tail insurance required

·       “Less” coverage than an Occurrence policy in the long-run

 

Final Thoughts

There is no right or wrong type of malpractice insurance to buy – it just depends on your unique practice situation, accessibility, and personal preference. Some carriers offer only Claims-made. Others offer both but may limit Occurrence coverage to certain medical specialties or geographic areas. If you’re not sure which policy type is right for you, ask a knowledgeable malpractice insurance agent to help you compare options and find the coverage best suited for your practice.

How Malpractice Premiums are Calculated

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Medical malpractice insurance premiums are determined by a variety of factors. Each carrier has their own unique set of underwriting guidelines that dictate how to appropriately rate a risk. Premiums are generally calculated by determining the base rate (sometimes referred to as the manual rate) and then the price is either credited or debited to account for special risk factors.

To determine the base rate, malpractice insurance carriers generally look at the following information:

Specialty – Your specialty will be one of the biggest factors in determining your malpractice premium. Underwriters will look at your training, practice experience, and the procedures that you will be performing to determine the appropriate rate.  Most specialties have additional classifications to further refine the rate, based on the type of work that you’re doing.  For example, a Family Practice doctor could be rated as “No Surgery”, “Minor Surgery”, or “Major Surgery – Including Obstetrics”, depending on the carrier’s rating structure.

Area – The geographic area where you’ll be practicing will also have an affect on your malpractice premium.  Carriers use rating territories (usually state and county driven) to price coverage based on the claim experience in that particular location.  Larger metropolitan areas tend to be priced higher than more rural areas, but each state is different.  If you practice in more than one place, the underwriter will generally look at your percent of practice in each area to determine the appropriate amount to charge.

Policy Type – Claims-Made and Occurrence policies are priced differently, so your rate will be determined based on which type you choose.  If you are quoted a Claims-Made premium, the rate will also take into consideration any prior acts (or retroactive exposure) that the carrier may be picking up from a previous policy.   

Limits – The amount of coverage that you need will also affect the cost of the policy.  Generally speaking, the higher the limits, the higher the price.

Effective Date – The start date of coverage will also have an affect on the price, since rates can fluctuate year to year.  For example, if a carrier changes their rates on 7/1/2019, any policy with an effective date of 7/1/2019 or later will be priced at that new rate.

Once the base rate has been determined, the underwriter may apply credits or debits to modify the premium to more accurately price the exposure.  Key factors such as part time/full time status, number of years in practice, claim history, affiliation with societies/associations, board certification, etc. may be taken into consideration as the underwriter refines the price. 

Large groups can also be experience rated, which allows the underwriter to price their coverage based on that group’s loss experience as compared with the actual loss experience of similar risks in that segment.  Experience rating allows the underwriter to build the premium from the bottom up and is often a more accurate price, since it is unique to that group’s claim history.

When you compare quotes from carriers, be sure to look at all of the rating criteria to make sure it’s an apples-to-apples comparison.  As you can see, there are a variety of factors that may have an impact on your rate.  And if you need help with your assessment, contact a qualified Independent Insurance Agent to walk you through the options and help you find the coverage that’s the right fit for you.     

Understanding Consent-to-Settle in your Malpractice Insurance Policy

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One of the most important features of a malpractice insurance policy is the consent provision, which gives you the authority to settle (or not settle) a claim that you are involved in.  While this may feel like it does not concern you now, it could make a huge difference if/when you are involved in a malpractice case in the future. 

Settlement is often an appealing option because it allows the insurer to close a claim for a set amount, instead of taking the case to trial, where the final verdict could be much higher (and take much longer, resulting in higher attorney fees, court costs, etc.)  But settlements aren’t always good for doctors.  They can have many negative impacts, such as:

·       Bad press

·       Outcome reported to the National Practitioner Data Bank / viewable to future employers, credentialing agencies, etc.

·       State licensure may be jeopardized

·       Malpractice premiums may go up, coverage may be non-renewed, or future coverage may be difficult to obtain (will always have to disclose settlement on future malpractice applications)

·       May be pegged as “quick to settle” and seen as an easy target going forward

With a pure consent-to-settle provision in your malpractice insurance policy, the carrier must obtain your written permission before they can settle a case on your behalf.  Without your consent, the insurance company cannot settle; rather, it must allow the complaint to go through the formal legal process.  But be wary of snags in the consent provision or other limitations that may protect the insurance company’s interests. 

A “hammer clause” states that if you refuse to consent to a settlement recommended by the insurer, the insurer’s liability for the claim will not exceed the amount for which the claim could have been settled, and any additional defense costs incurred following your refusal to settle will not be covered.  Essentially, the hammer clause gives the insurance company the ability to limit its exposure to the amount for which the claim could have been settled (plus past costs and expenses) when reasonable consent is withheld. “Reasonableness” can be questioned by the carrier, so be sure to understand how they determine this along with other concerning factors.

Other limiting factors may have to do with unique state attributes, such as Indiana’s medical review panel process.  For example, in the state of Indiana, after a claim goes through the initial panel process, if the findings of the panel are 3-0 against the healthcare provider, the carrier can deny consent-to-settle rights that would have otherwise been allowed.

Top rated malpractice carriers are winning 90% of the cases that they take to trial; furthermore, they are closing 80% of their claims with no indemnity payment at all (in other words, they build such a strong case that the opposition decides not to proceed).  Doctors should talk to their defense teams to determine the proper course of action and take a proactive stance in the handling of their malpractice case to ensure the best possible outcome.  

Be sure to understand how your policy’s consent provision works so that you can have a voice in the handling of your claims.

New Grads: 5 Questions to Ask About Your Group Malpractice Coverage

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A lot is happening when physicians are looking for their first professional position: They are finishing training, taking the boards, and trying to decide where they may want to live and practice medicine.  As overwhelming as that may be, don't skimp on your due diligence as you decide which practice is the right fit for you - and make sure you know how you'll be protected from malpractice risks in the future. Here are 5 questions to ask about your group’s medical malpractice insurance coverage.

Question #1: What type of policy is it?

It’s important for you to know what type of malpractice insurance policy is being provided for you – Occurrence or Claims-Made?  Claims-Made coverage triggers based on when the claim is made against the provider; so a physician must carry the insurance while they are actively practicing and then obtain tail insurance (or nose/prior acts coverage from a new carrier) after the policy is cancelled to continue the coverage in the event that a claim is made after the termination date. Occurrence coverage triggers based on when medical incident actually occurred, even if the claim is filed after the policy has been cancelled.  Tail insurance is not necessary for Occurrence policies.

If your group is providing a Claims-Made policy for you, it’s important to find out who is responsible for purchasing the tail coverage when you leave.  This is an often-overlooked item that needs to be decided early in your contract negotiations and ideally written into your employment agreement so there is no confusion when you leave.  Tail insurance can be expensive (typically 1.5 – 2 times an annual premium), so you’ll need to be prepared for that expense if it will be your responsibility.

Question #2: Who is paying for your policy?

Ask your potential employer who will be paying for your malpractice insurance policy. It may be covered by the group, it may be deducted from your pay, or you may be individually responsible for paying the premium. If you are not satisfied with the coverage that is being provided, you may want to ask about obtaining your own separate policy.

Question #3: Are you covered on a shared limits basis? Or do you have your own individual policy limit?

Be sure to understand how much coverage you have in the event that you are named in a medical malpractice claim.  If you are covered on a shared limit policy, that means that you (and all the other named individuals) will be sharing the same policy limit, which potentially reduces the amount of coverage available to you.  It is generally recommended that physicians and higher-level practitioners have their own individual policy limits.    

Question #4: Is coverage limited to your scope & duty as an employee of X medical group?

As previously discussed, most employed physicians’ malpractice policies are not written on a broad form; they are limited scope & duty policies. This means that your policy only covers you for claims related to the work that you do for that employer. If the incident that led to a complaint falls outside the scope of your job description or falls within a policy exclusion, you may not have coverage.

If you provide professional medical services outside the scope of your employment, even if it’s as a volunteer or a favor to your neighbor, you need to have a separate policy in order to be covered. Good Samaritan laws protect you only in emergency situations. Many carriers offer moonlighting policies or part-time malpractice insurance policies at discounted rates, so obtaining additional coverage is generally affordable.  

Question #5: Do you have consent to settle?

Individual physicians and their employers may have different views when it comes to the impact of large verdict cases. Consent to settle becomes a key issue in these instances.  When your malpractice insurance policy contains a consent provision, the carrier must obtain your direct written consent before settling a claim on your behalf.

Consent to settle is important because it allows you to play an active role in the handling of your case. It gives you a voice in your defense.  Make sure you've read your malpractice insurance policy to know your rights when it comes to matters of individual consent or engage with a knowledgeable insurance agent to help.