“Ask eQuoteMD, with Tim Ryan.” A medical malpractice insurance video blog question and answer session to help physicians have a better understanding of their coverage options. eQuoteMD provides quality solutions for medical malpractice insurance to doctors, surgeons, clinics, hospitals and facilities across the United States.
Video Transcript –
Tim Ryan: Hello and welcome to eQuoteMD’s medical malpractice insurance video blog. I’m Tim Ryan and I am here to answer your medical malpractice insurance questions.
Recently, I was approached by one of my clients and asked to explain the difference between defense inside of the limits of a medical malpractice insurance policy and defense outside of the limits of a medical malpractice insurance policy.
Now to give a little background to what specifically we are talking about. In this case when we say defense that is the cost to defend a doctor in the event of a medical malpractice claim incurred by the medical malpractice insurance company. So, in other words, how much does it cost to pay for the lawyers and the trial fees and the court fees when a claim does go to court? When we are talking about limits that is the limits of liability that have been set forth on your policy. For example, if you have $1,000,000/$3,000,000 limits on your policy that means for any one specific claim the medical liability insurance company is going to pay a maximum of $1 million.
Now the important part comes when we start talking inside and outside of those limits. Let’s use an example. If a fictitious Doctor Johnson is sued and the trial goes to court and the jury decides that Doctor Johnson owes a $1 million to the plaintiff, he is going to have to pay that. More specifically his medical malpractice insurance company is going to have to pay that. Now, if the defense costs for that case were, let’s just take a number, $100,000; it becomes very important whether or not that payment to defend the case is inside or outside of the limits.
For example, if it inside of the limits, that means that the $100,000 to defend the case eats up the first $100,000 of liability that the medical malpractice insurance company was going to pay to the plaintiff. Since the total cost incurred by the medical malpractice insurance company was $100,000 for defense and $1 million for indemnity payments, that is $1.1 million. $100,000 above the limits of liability leaving Doctor Johnson on the hook for $100,000 that exceeded the limits in his policy.
Now if the defense costs are outside of the limits of liability, the whole case was still $1.1 million, but that first $100,000 to defend the case did not count against the limits of liability of $1 million. Therefore, the entire $1.1 million is paid for by the medical malpractice insurance company.
Now again, every medical malpractice insurance company is going to handle this differently. They may or may not have different options, so again it is just very important to understand how this is set up within your policy. Make sure that you are speaking to a broker or knowledgeable person about how exactly your medical liability insurance policy is set up so that you can understand it in the event of a claim.
Again, I’m Tim Ryan here for eQuoteMD ready and able to answer any of your medical malpractice insurance questions. Have a great day!
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