No-Known-Loss Letters: Do You Need to Take Them Seriously?
When entering into claims-made policies, physicians are regularly asked to sign no-known-loss letters as part of the med mal insurance application process. But how seriously dose a physician need to take them? The short answer is: VERY seriously. Today we will also give you the longer answer and explain why no-known-loss letters are not to be taken lightly or merely viewed as a meaningless piece of paperwork in the med mal insurance application process.
First, they are legal document. Though it may be tempting for a physician to not disclose or report a possible claim (or the threat of a claim) that he or she is aware of, knowingly withholding information can prove disastrous. Most significantly, it may void the policy that it pertains to. And, as a further result, a physician may have a very hard time getting future med mal insurance coverage. Admitted insurance carriers may not want to cover such a physician. Thus, a physician may then have to seek coverage with a surplus lines company and pay a higher premium. However, if he or she is still unable to find coverage with a surplus lines company, the physician may then have to seek coverage in his or her state’s med mal insurance pool, if his or her state has such a pool. Some states do not have a med mal insurance pool. If this is the case, the physician does not have many options. The physician may choose to quit practicing medicine, may choose to practice uncovered (which we do not recommend), or may try to join a group where he or she can get coverage through the group (though there is no guarantee).
No-known-loss letters are documents to be taken seriously. If you have further questions about them, or med mal insurance in general, give us a call and we’d be happy to answer them.