The information on your policy declarations page and certificate of insurance are the factors that determine who coverage is provided to, how much coverage is allotted and how far back it will extend into your prior acts period.
You will see various sections on your certificate of insurance (COI) including: Producer (your agent), Insurer (insurance company providing coverage), Insured (you), Type of coverage (professional liability should be marked at the bottom), and description of coverage (this will include your policy type, retroactive date and any additional coverage you may have on your policy). These are the main components of your professional liability policy.
To ensure that you are properly covered, it is important to understand what those components mean to you and your practice. Each piece should be intentional and understood by you and your office manager if he or she handles it for you. Below is a list of questions to consider when reviewing your medical malpractice insurance policy.
Limits of Liability
- Are my limits of liability sufficient?
Physicians in most states, with the exception of a few, carry $1,000,000 (per claim)/$3,000,000(aggregate) limits of liability. Anything lower than that has the potential to be insufficient. Anything higher than that has the potential to put a target on your back to result in higher indemnity payments in the event of a lawsuit, because you have more insurance coverage than most physicians. Typically, if there is no need for higher limits, it is advised to purchase $1,000,000/$3,000,000 limits or whatever your normal state limits are.
- Is your entity covered?
If you have an entity, it is advised to have it insured because if a claim is made against you, it is likely that your entity will be named as well. This adds an additional level of protection for you and your business.
- Do you have shared or separate limits of liability for your entity?
Most insurance carriers allow physicians to have their entities added onto their policy on a shared limit basis, meaning you and your entity share the $1,000,000/$3,000,000 limits of liability if a claim comes up, for no additional premium. If you choose to have separate limits for your entity, you will typically be surcharged approximately 10-15% of your annual premium.
Additional Insureds
- Do you employ mid-level providers?
This is another situation that allows you the option to add these providers on a shared or separate limit basis. You can add them on a shared limit basis for no additional premium, or you can have separate limits for them. However, for providers, as opposed to your entity, each of them will be underwritten individually and charged a premium based on their workload, specialty, etc.
- Do you employ other physicians?
Employed physicians often purchase their own malpractice insurance. However, if you employ physicians and are purchasing their coverage for them, it is important to understand your options. You can have your employed physicians share in the limits of liability, you can purchase separate limits for each of them, or in some cases you can add them to your policy on a slot basis. This will depend on the number of physicians, their specialty and what state you practice in. Physician groups are often eligible for significant discounts.
Coverage dates
- Retroactive Date
This is one of the most important pieces of information on a claims-made policy. Your retroactive date is the date that you first started on your claims-made policy. The date is so important because it is the date that your exposure begins. Making sure you are properly covered back to that date is imperative, because if a claim occurs from an incident that happened last year, you will not have coverage if you do not have prior acts included back to your retroactive date. Always ask your broker or insurance provider to confirm that prior acts (sometimes referred to as nose coverage) is in place. Furthermore, when you are obtaining quotes prior to your renewal you should make sure that the quote includes prior acts and that your retroactive date is accurate.
- Effective Date
Your effective date states when coverage begins and ends during a given policy period. If you are new to practice or starting with a new employer, you need to be certain that every day you have had exposure is covered. If you cancel your previous policy on the 2nd and your new policy isn’t effective until the 4th, but you saw a patient on the 3rd, you have an uninsured (bare) period. These are little things, but they are very important in the event of a claim.
Practice Location
- Rates are based not only on specialty and claims history, but also on what county or territory you see patients at in your respective state. While some states only have one territory, many have up to five different territories that vary in rates based on claims frequency and severity. If you have multiple offices that are in different territories, your insurance carrier needs to be aware of that so they can endorse that additional practice location onto your policy. If your listed sole practice location is primarily in a lower risk territory and you see a patient in a higher risk territory, coverage could be denied in the event of a claim if you did not provide your insurance company with that information.
Specialty Classification
- Specialty
Last on the list, but certainly not of least importance, is your specialty classification on your policy. While this may seem hard to miss, it is important that your specialty is correctly classified on your insurance certificate and declarations page. For example, if you are an internist and perform minor surgery, you have to have that reflected on your policy. Otherwise, if a claim arises from a surgery you performed and you are classified as “No Surgery”, your insurance carrier can deny coverage for that claim.
There are many nuances when it comes to a professional liability insurance policy, and we are aware that it can be overwhelming. To obtain a no-obligation quote for your medical malpractice policy, click here. If you have any questions or would like to discuss your current coverage to make sure it suits your specific needs, please contact our office at 800-457-7790.
To contact the author, call 800-457-7790 and ask for Matt Thompson.