The ABCs of malpractice insurance

•For doctors starting independent practice, choosing the right malpractice insurance and insurance carrier are crucial decisions. •They need coverage that is:

  - affordable

  - tailored to their specific requirements

  - provided by a financially sound company whose judgment they trust.

Here are answers to some basic questions about malpractice insurance.

What are the types of malpractice insurance?

•There are two basic types of malpractice insurance policies:

  1). occurrence

  2). claims-made

•An occurrence policy covers lawsuits brought over alleged harms caused during the period the policy was in effect, regardless of when the suit is brought. •Occurrence policies provide coverage even if a doctor is sued after the policy is no longer active.

Types of malpractice insurance, cont’d

•A claims-made policy covers malpractice claims for alleged harms that took place and were reported during the period the policy was in effect, and under the terms of the policy in effect when the claim was made. •For example, if a physician is sued in 2020 for an incident that occurred in 2018, the claim will be covered by the policy as it exists in 2020.

•Because their coverage is limited to the period when the policy is in effect, premiums for claims-made policies usually are lower than for occurrence policies. 

What is tail coverage?

•Tail coverage is malpractice protection for doctors with claims-made policies who have retired, or whose policies have lapsed or been cancelled. It can usually be purchased from the carrier providing the original claims-made policy.

•Tail coverage is almost always more costly than standard claims-made policies. In addition, it only covers incidents from the coverage period of the original policy.

How much does malpractice insurance cost?

•The cost of malpractice insurance varies according to many factors, such as whether the policy is occurrence or claims-made, and the physician’s specialty. Specialists in fields with higher risks, such as surgery or obstetrics, usually will pay higher premiums than those in low-risk fields. •Other factors determining premiums include:

  - a doctor’s previous claims history

  - how long the doctor has been in practice

  - whether they perform procedures outside their specialty

  - geographic variations in malpractice payout amounts

Where can I buy malpractice insurance?

•Doctors can buy malpractice coverage either directly from a carrier or through an insurance broker. •If purchasing directly, research the carrier’s financial strength rating from AM Best at

Ambest.com

before getting a quote. Experts advise buying from a company with an “A” rating or better.

•If going through a broker, find one who specializes in malpractice insurance and knows the market well.