In addition to understanding the financial health of a potential insurer, there are many other factors physicians should consider when deciding on a medical malpractice insurance policy. These factors could make a difference in how a claim is defended, how much protection is available, types of coverage offered in the policy, and many other things.
Consent to Settle: The insurance company must obtain the written permission of the insured physician prior to making any settlement with a plaintiff, if there is a consent to settle clause in favor of the insured in the policy. If there is no consent to settle clause, then the insurance company has the power to settle a claim as it sees fit, without the consent of the policyholder.
Cyber liability: These days, many, if not most, medical malpractice insurance policies include some level of supplementary cyber liability coverage in their policy endorsements. Cyber liability coverage attached to a malpractice insurance policy usually provides a limited amount of protection, separate from the medical malpractice insurance limit of liability. With both patient health data and other personal information stored in electronic health records, hospitals, health care facilities and even individual physician practices are all vulnerable to data breaches and attacks. Physicians should pay attention to the level of supplementary cyber liability coverage offered as part of the policy. Physician practices may want to consider purchasing additional cyber liability coverage to make sure they are protected in the event of a large data breach or other cyber-attack, as the supplementary coverage provided may not be adequate.
Death/Disability/Retirement: Free Tail Coverage Provisions: Medical malpractice insurance policies can vary greatly in their provisions in the event of death, disability and retirement. Many policies will offer benefits like free tail coverage automatically upon death and disability (depending on the nature of the disability), but there may be restrictions at retirement based on age and length of time with the insurance company. Especially for physicians who are considering retirement, these provisions can be very important and can influence when a physician is best able to retire with free tail coverage.
Defense Costs: The cost of defending a claim, including legal fees, court costs, attorney fees and expert witness fees. Defense costs can either be ‘inside’ or ‘outside’ the limits of liability for the policy, which is an important difference. If defense costs are inside the limits, then the cost of defending the claim is subtracted from the total amount of liability coverage available. For example, if a policy provides $1,000,000 in liability coverage and the defense cost is $150,000, then there would only be $850,000 left to pay for any settlement or judgement. If defense costs are ‘outside’ the limits of liability, then the cost of defending the claim will not reduce the amount of coverage, meaning that the full $1,000,000 would still be available to payout any settlement or judgement and the $150,000 in defense costs is assumed by the insurance carrier. Defense costs outside the limits of liability can be unlimited or capped with their own separate limit. For the insured, it is better to have unlimited defense costs outside the limits of liability.
Exclusions: A statement of specific items that an insurance policy will not cover. Physicians should understand the exclusions in their policy and be aware of claims or allegations their policy will not cover. For example, it is common for some policies to exclude any duties carried out as a Medical Director, which can be covered under a separate policy. Another common exclusion is payment for settlements or judgements for claims of sexual misconduct.
Incident Reporting: An adverse outcome or event that may become a claim. Some insurance policies will allow an incident to be reported to the insurance company as a potential claim prior to any suit actually being filed. Early reporting of an incident before it can become a claim may allow for intervention before an actual suit is filed against the healthcare provider.
Some insurance companies will only accept a “written demand for damages” as a claim, meaning a physician will have to wait for a demand for money or to be sued before the insurance company accepts the claim. This has two downsides for physicians. First, it can make it difficult for physicians to transfer insurance carriers until the claim has been filed, as a new insurance company will not want to insure a physician who is expecting to be sued. Secondly, it will not be possible to resolve the problem before an official suit is filed against the physician.
Limits of Liability: Insurance policies impose limits on the amount of coverage by claim and by year. For example, many medical malpractice insurance policies will have limits of $1,000,000/$3,000,000, meaning the insurance company will cover up to $1,000,000 per claim and provide up to $3,000,000 in total coverage for all claims in a given policy year. However, if a given claim is settled for more than $1,000,000, there would not be coverage for the amount exceeding $1,000,000. Similarly, if a physician faced several claims which were less than $1,000,000 individually, but collectively exceeded $3,000,000, there would be no coverage for the amount exceeding $3,000,000.
Locum Tenens: Provides insurance coverage for a substitute physician so that he or she can fill in for the regular physician policyholder without any need to purchase additional insurance coverage. For example, many physicians take time away from their practice for vacation, additional education, research or sabbatical work, or to deal with personal matters, such as pregnancy, family care or personal health issues. Locum tenens coverage allows these physicians to employ a substitute physician during their absence, with the substitute physician being insured under the absent physician’s own insurance policy. Insurers have different regulations surrounding Locum Tenens coverage, so it is important to check with your insurer to not only to be sure that this coverage is offered, but also to understand the details of the coverage and whether or not coverage is automatically extended to the Locum Tenens physician, or if additional requirements need to be fulfilled.
Notice of Non-Renewal: Insurance companies in many states are required by law to provide written notice in advance of when they intend to cancel or not renew coverage. Depending on state rules, this notice must be given a minimum amount of time before the cancellation takes effect. However, some insurance companies will provide advanced notice of non-renewal, prior to the legally mandated notice date. This will provide the insured with a longer window in which to shop for a new policy. It will also allow the insured to put this new policy into place before the old policy is officially cancelled. This is important because it is more difficult to obtain a new policy once a physician has a cancelled policy on his or her record.
Portability: The ability to take the policy you have and go to another state without having to buy tail coverage. Many insurance companies do not operate in all states. Physicians considering a move to a different state may want to look into the portability of their insurance coverage. If the policy is not portable, the physician might need to purchase tail coverage, which can be expensive, as well as finding a new insurance carrier. An alternative is getting coverage from an insurance carrier that offers coverage in both the old and new state, eliminating the need to buy tail coverage.
Premium discounts and credits: Many insurers offer various types of premium discounts or credits to physicians for completing risk management coursework, membership in a particular professional association, being claims-free, part-time, or new-to-practice. Premium discounts and credits can be significant, so physicians should factor these in when comparing policy options.