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New Jersey state laws and regulations that affect your medical practice

1. How much medical liability insurance do I need?

A physician who maintains a professional medical practice in this State and has responsibility for patient care is required to be covered by medical malpractice liability insurance issued by a carrier authorized to write medical malpractice liability insurance policies in this State, in the sum of $1,000,000 per occurrence and $3,000,000 per policy year and unless renewal coverage includes the premium retroactive date, the policy shall provide for extended reporting endorsement coverage for claims made policies, also known as “tail coverage,” or, if such liability coverage is not available, by a letter of credit for at least $500,000.

(N.J.S.A. 45:9-19.17)

2. What is a “letter of credit?”

A letter of credit means a non-assignable, non-transferable, unexpired, continuous irrevocable obligation, liability bond or other instrument issued by a bank or saving association authorized to do business in this State, payable to the physician as the beneficiary within 30 days after a demand for payment and the presentation of a final judgment or settlement in a medical malpractice action.

N.J.A.C. 13:35-6.18

3. Must a physician provide notice of coverage to the State Board of Medical Examiners?

Yes. The physician must notify the State Board of Medical Examiners of the name and address of the insurance carrier or the institution issuing the letter of credit. The State Board of Medical Examiners may, pursuant to the Administrative Procedure Act, establish by regulation, minimum amounts for medical malpractice liability insurance coverage and lines of credit in excess of those amounts set forth herein.

(N.J.S.A. 45:9-19.17)

4. What are the penalties for noncompliance with these insurance coverage requirements?

A physician who is in violation of these mandatory insurance coverage regulations will be subject to disciplinary action and civil penalties.

(N.J.S.A. 45:9-19.17)

Copyright © Kern Augustine Conroy and Schoppmann, P.C. Used with permission.

Updated 2008

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