Told You Need a Non-admitted, Surplus Lines Carrier?

Thinking PhysicianAs you may know, there are 2 types of insurance companies that specialize in physician malpractice insurance. The first type, admitted, we’ll discuss in a future post because in this post we’ll focus on surplus lines companies, or non-admitted insurance companies. (But, briefly, an admitted company is an insurance company that participates in the state’s Department of Insurance Guarantee Fund. These insurance companies are regulated by the states individually and each state has a different process and different regulations for overseeing these insurance companies.)

The non-admitted insurance carrier, or surplus lines companies, are licensed and regulated to do business in the states they operate in, but the state provides no guarantees for their solvency and will not bail them out or provide resources if they go out of business.

Who uses surplus lines companies? For physicians that do not qualify for coverage by admitted carriers, the only other option is to approach the surplus lines companies for coverage. Some reasons that an admitted carrier would not cover a physician are: multiple claims, one large claim, physicians who work outside their specialty or provide services outside their specialty, or if a physician has had licensing or Board issues or problems.

It should be noted that just because surplus lines companies don’t participate in the state Department of Insurance Guarantee Fund, and although they’re not heavily regulated by the states themselves, the insurance companies are typically large, multinational insurance companies and are typically highly rated. Two surplus lines companies that we like to work with regularly are Admiral Insurance Company and Lloyd’s of London.

Policy provisions of a surplus lines policy. One major difference between an admitted insurance policy and a surplus lines policy is that a physician or care giver may have to pay for additional provisions that are typically found in an admitted policy. For instance, a provision that says defense costs are outside the limits regarding a claim may cost extra with a surplus lines policy. Therefore, it is important to discuss all of the policy features and available options with your agent before deciding on an admitted policy.