Do you need excess liability coverage?

Q. I'm a family physician with $500,000/$1.5 million in malpractice insurance coverage, which I thought was enough. But I'm worried because an ob/gyn here recently lost a case that resulted in a $4 million judgment. For my peace of mind, I'm thinking about buying an umbrella or excess liability policy for additional coverage. What's the difference between the two policies, and which one is best suited to my needs?

Primary care physicians generally don't need more than $1 million/$3 million coverage because they usually don't engage in high-risk procedures that lead to large verdicts. They may be at such risk, however, if they're one of several co-defendants in a cancer case involving delayed diagnosis or misdiagnosis. In such cases, a large judgment or settlement might be apportioned among the co-defendants.

A better bet in your case would be excess liability coverage, which will indemnify you against any judgment or settlement that exceeds the limits of your primary malpractice policy. Most individual excess policies provide an extra $1 million or $2 million in coverage, and the price is typically less than the cost of the primary policy because there's less risk. These excess policies may contain limiting conditions and exclusions, however.

Finally, excess liability insurance can be a double-edged sword: If you're sued, the plaintiff's attorney will probably learn during discovery your total policy limits, including any excess coverage. The higher your total coverage, the more damages he'll seek, and the bigger the award or settlement will be if you lose. Since this type of coverage can be complicated, consult your insurer or your own attorney before buying it.

The author, who can be contacted at lj@bestweb.net
, is a healthcare attorney in Mt. Kisco, NY, specializing in risk management issues.

This department deals with questions on common professional liability issues. We cannot, however, offer specific legal advice. If you have a general question or a topic you'd like to see covered here, please send it to Malpractice Consult, Medical Economics, 123 Tice Boulevard, Suite 300, Woodcliff Lake, NJ 07677-7664. You may also fax your question to us at 201-690-5420 or e-mail it to memalp@advanstar.com
.