Physicians work very hard to achieve success in their profession. Years of education and training, sacrifices of personal and family time, and long work hours are absolute requirements for a career in medicine. Providers need to protect their reputations, practices, and personal assets by purchasing medical professional liability – medical malpractice – insurance. But to make that decision alone can be overwhelming.
What types of coverages are available? What is the best type of medical malpractice insurance company? Is there anyone that can help?
Let’s start with the types of medical malpractice coverages. A professional liability insurance policy can be either Claims-Made or Occurrence coverage. What’s the difference?
- Claims-Made – coverage is triggered when the claim is reported. Whether an incident that might turn into a claim, or an actual letter or suit is filed, the active insurance policy when the claim is reported is responsible for the coverage. Claims-Made policies include a retroactive date, which is the date the coverage first began, and that date remains the same every time a policy is renewed. If a policy is not renewed on the annual effective date, or is cancelled, there is no coverage for claims after the cancellation date. That is where “tail coverage,” or an Extended Reporting Endorsement comes in to play. The tail provides coverage from the cancellation date back to the retroactive date, and the endorsement is typically permanent
- Occurrence – coverage is triggered by the date of the incident or alleged malpractice. If the event occurred 2 years ago and the physician has changed insurance companies, the claim would be filed with the previous company – the one that insured the physician at the time of the event. As long as the company is still around there is coverage, so there is no need for tail medical malpractice coverage.
There are reasons to choose one type of coverage over another, depending on the situation. A physician who is thinking about leaving private practice and wants to avoid purchasing a tail would definitely benefit from an Occurrence policy. On the other hand, a physician who is planning on staying in private practice for the long term would be better off with a Claims-Made policy because it is less expensive, and most policies include a free tail for retirement, death, or disability.
What are the different types of medical malpractice insurance companies?
- Stock Company – a traditional company owned by stockholders and designed to make a profit. These companies are regulated by state agencies that review the financial stability and practices.
- Mutual Company – a traditional company owned by the physicians it insures, and sometimes run by a board of directors that includes physicians. Often physicians are considered members and may be entitled to dividends based on the performance of the company.
- Risk Retention Group – a non-traditional company formed by a group with similar risks to purchase insurance. Often RRGs are formed by physicians in a particular specialty, and there can be an investment required in addition to premiums. RRGs have a lot of flexibility because they are not regulated as closely as traditional companies.
- Captive Insurance Company – a non-traditional company formed for a specific entity. Hospitals, large groups, and some ACOs often form captives, and use a third-party administrator to handle billing and claims services.
- Surplus Lines Insurance Company – a non-traditional company formed and domiciled in one particular state, but technically not licensed in any other state. However, through special permissions these companies are typically allowed to write insurance in all states, being regulated only by the state in which they are domiciled. Surplus Lines companies are typically used for hard-to-place risks such as high risk specialties, high risk geographical areas, physicians with adverse claims history, or exposures that are unique or unusual.
Most physicians are insured with a traditional stock or mutual company, but certain practice situations may require coverage with one of the non-traditional companies. Because each one is designed to meet a need, there is no one-size-fits-all answer to the “best” type of company.
Is there anyone who can help?
Yes! eQuoteMD works with experienced independent insurance brokers who specialize in medical malpractice insurance. Our team of experts guides physicians and practice administrators through the process of finding the best type of coverage and insurance company at the best rate. We have brokers licensed in all 50 states and have options for any specialty. Find out what coverage is the best fit for your practice by requesting a quote today.
In addition, one of our insurance carrier partners, Coverys, has provided a great resource for physicians and practice managers with even more details about this topic and others, titled, Med Mal 101.