Medical Malpractice and Errors and Omissions Insurance
M.D.s, MA.s, RNs home healthcare providers, RPT's, Occupational Therapists, etc. all need professional liability insurance.
Our years of experience representing medical malpractice insurance carriers and policyholders has influenced our list of FAQs below:
- Do I purchase an errors and omissions professional liability policy, a medical professional liability policy, or a medical malpractice insurance policy?
- Should I get an occurrence policy or claims made policy?
- Can I have a policy with tail coverage?
- Do I also need general and business liability insurance?
The answers for medical doctors and allied healthcare professionals is: Yes, you need Medical Malpractice Insurance, which is synonymous with Medical Malpractice Professionaland Errors and Omissions Insurance.
Definitions offered by the Insurance Services Office: Claims-made malpractice insurance provides coverage if the policy is in effect both when the incident took place AND when the claim is filed.
If a claim is filed after the end of the policy date, the claim is NOT covered.
This is the important distinction between claims made and occurrence. The deficiency of claims made is leaving the future claims uncovered and perhaps uncertain.
You wait until the cancellation of the policy. At that time, the insurance carrier bills you and offers various lengths of tail coverage with corresponding premiums.
The extension is called the extended reporting endorsement (Or more commonly ‘tail’) The deficiency of a claims-made policy is also its strength: By deferring the decision and the payment of your extension (tail) to that date when you need it, you save hundreds or thousands of dollars of premium each year.
The savings in claims-made lies in the opposite premium calculus that defines occurrence coverage.
Occurrence premium actuarially contemplates the cost of future claims in the present-day annual premium.
Aside from the market reality that these policies are rare and often not available in the small group or solo physician medical malpractice market, they are expensive when they are available.
The strength of an occurrence policy is that you are free to walk away without worrying about the term of the extension.
The policyholder also does not have to worry about choosing the length of the extension, the offer by the incumbent carrier, or the added expense of the premium.
The kind of insurance you need is a medical professional liability policy—also known as medical malpractice.
Whether that policy is claims-made or occurrence is often determined by the market.
You simply have to ask the carrier and then consider your circumstances.
My years of experience representing carriers and clients in this market is that the tail is manageable.
( And, therefore, you don't need to pre-fund it with an occurrence premium.) When you do make that decision to cancel and implement this extension of your coverage, often, there are terms of payment that allow you to stretch it out over two years.
As long as you are aware of the premium factors, you can budget for this expense.
It might make very good sense to save the premium and purchase a claims-made policy.
There are also hybrid policies.
A hybrid policy has elements of both claims-made and occurrence. The occurrence dynamic is contained in the roster endorsement.
With insurance contracts, endorsements extend coverage; exclusions restrict.
Since the most expensive medical providers to insure are M.D.s, DPMs, CRNAs etc.. the roster endorsement is attached to the claims-made base policy— allowing any credentialed provider to go on and off the policy without triggering tail.
The Doctors Insurance Agency works in this market every day.
Choices of the type of policy and the specific endorsements can mean the difference between properly protecting your assets or not.
Choosing the correct method to onboard and cancel a provider can save thousands of dollars of premium.
Below is our ‘explainer video’ that discusses these important elements of cover.