Medical professionals bear a tremendous responsibility and burden. Practitioners do their best, but sometimes, in specific situations or incidents, errors or miscommunication occur that could lead to litigation.
That is where medical liability insurance comes into play. However, liability insurance is complex, and it’s important to understand the available options to ensure adequate coverage. In the article below, we look at some types of medical malpractice insurance. These additional types of coverage go beyond what basic insurance provides.
What is Medical Liability Insurance?
Primarily, it is more commonly referred to as medical malpractice insurance. It protects healthcare providers against claims by patients who allege harm due to negligence or errors in their treatment.
This insurance covers legal costs, settlements, and other expenses when a claim is made against the medical provider. There are many different types of medical liability insurance coverage, none of them uniform or standard in nature, each with various characteristics for the healthcare industry
1. Claims-Made Coverage
The most common type is claims-made coverage. This coverage is valid only if the incident occurred and the claim is made during the policy’s active dates. Ultimately, this insurance policy must exist at both times: at the time of the event and at the time the claim is filed.
For example, a doctor has a claims-made policy from the period 2018 to 2022. A patient filed a claim in the year 2023, but the incident happened in the year 2021. The doctor would not have coverage unless he had an active policy in the year 2023, even though the incident occurred in 2021 while he had coverage.
2. Occurrence-Based Coverage
Occurrence-based coverage functions under a different principle than claims-made insurance. This type of policy offers protection for events that occurred during the term of the policy, regardless of when the claim is filed. Even if the claim is filed years later after the policy has run off, the healthcare provider is still protected for events that occurred while the policy was in effect.
For instance, if a doctor with occurrence-based coverage from 2018 to 2022 receives a claim in 2024 for an incident that occurred in 2021, they would still be covered. The process of the policy would be open and continuous, thus making a claim possible since the incident has taken place during the time they were covered.
Although occurrence-based coverage offers more protection than a claims-made policy, it typically carries a higher malpractice insurance premium because it provides protection over a longer period of time.
3. Tail Coverage
Tail coverage is typically an add-on and provides protection after a claims-made policy ends. It is highly important for retiring professionals or practitioners changing jobs or canceling their insurance to still have protection from things that occurred during those periods.
For example, if a doctor retires and closes her claims-made policy in 2024, all claims after 2024 from incidents that happened when the policy was active would be included if she also purchased a tail coverage policy.
Tail coverage, which can be expensive, is often necessary for practitioners in high-risk specialties because claims may emerge years after a procedure.
4. Nose Coverage
Nose coverage, also referred to as prior acts coverage, works in the opposite of tail coverage. Its principle covers claims based on incidents that took place before a new claims-made policy could start.
This is incredibly valuable when starting with a new employer or position. Instead of purchasing tail coverage from the old insurance company, a healthcare professional can opt for nose coverage from the new one, which will cover incidents from the prior insurer’s policy period.
For example, if a doctor changes jobs in the year 2024 and begins a new claims-made policy with a new employer, nose coverage will protect them from claims filed against them that occurred before they commenced their new policy.
5. Group Coverage
Group coverage is for those medical practices or health institutions that have many healthcare practitioners under their employment. This form of coverage covers everyone as a package such that both the individual practitioner and the institution get covered by claims.
Group coverage is the most efficient way for organizations to ensure all healthcare professionals are protected under a single policy, rather than having them purchase individual insurance separately.
In this respect, the terms of group coverage policies must be thoroughly scrutinized by the service providers since there are wide ranges of scope protection, and the individual practitioners still require additional coverage for certain risks.
6. Excess Coverage
Excess coverage is additional protection, which impacts a standard liability policy when its limits are exhausted. In high-stake cases where damages and lawyer costs can run high, excess coverage provides the crucial extra money to pay claims.
For example, a physician’s standard malpractice insurance has a limit of $1 million per claim, but a physician facing a malpractice lawsuit results in a $2 million settlement. Excess coverage would cover the remaining $1 million, ensuring the healthcare provider isn’t left personally responsible for the costs.
Such coverages are generally in demand by health care professionals in risky specialties where the odds of large settlements are bigger.
7. Umbrella Coverage
Umbrella coverage is like excess coverage, except it provides further cover. An umbrella policy may extend across all types of liability coverage, ranging from general business liability or personal liability instead of just medical liability.
The umbrella policy becomes a secondary benefit as an added safety net across the board for healthcare professionals practicing as owners of their own practices or with multiple liability issues, not specifically against claims of medical malpractice.
8. Self-Insurance
A few large healthcare organizations or hospital systems opt for self-insurance, where they set aside funds to pay claims from malpractice rather than purchasing any kind of traditional insurance policy.
This is extremely costly for very large organizations that can absorb that specific risk but requires a lot of financial resources and probable expertise to manage the potential claims.
For individual practitioners or small groups, self-insurance is typically not feasible due to the financial risk involved. For larger institutions, it can provide more control over how claims are handled and resolved.
Conclusion: Getting the Right Insurance for Your Practice
Medical malpractice insurance is perhaps one of the most important decisions that health care providers make at any level. You may be an individual practitioner, group practice, or even the executive of a large hospital system. Understanding the different types of insurance ensures you are adequately protected in case of a claim or lawsuit.
While occurrence-based or claims-made policies happen to be the mainstays of medical malpractice insurance, there may be high-risk situations that require additional coverage in the likes of tail coverage, nose coverage, and excess or umbrella coverage.
Take the time to review your needs, evaluate your specific risks, and take advice from insurance experts so you can be certain that you have all of the coverages that may be helpful in defending your practice or your career and your source of livelihood against any potential future legal challenges.
