by Kelly Reed

3 Types of Medical Malpractice Insurance Policies


National data will show that physicians continue to gravitate out of private practice.  Ironically, these past few months I have seen multiple solo physician practices open. A physician who starts a practice from scratch faces many challenges:

  • Insurance for their business
  • Personal Insurance – Life, Disability, Business Overhead, Long-Term Care, etc…
  • Loan for their equipment/real estate
  • Third Party Payer relationships and billing
  • Employees
  • Electronic medical records
  • Etc….

While the intent of this blog is not to solve all problems, but to provide some clarity on “What type of Insurance do I need to buy for my business and specifically what type of Medical Professional Liability coverage is available?” I would advise a physician starting a new medical practice review the following types of insurance policies for their commercial insurance exposure:

  1. Medical Professional Liability
  2. Cyber Liability
  3. Businessowner’s Policy – Property & General Liability
  4. Workers Compensation
  5. Umbrella
  6. Business Auto
  7. Employment Practices Liability
  8. Employee Benefits Liability
  9. Crime

Medical Professional Liability or “Medical Malpractice” coverage is often of most importance to a physician. The first statement I often hear is, “I want my policy to come with tail coverage.” What is often meant is that the physician wants a policy that provides “tail coverage” or coverage for their prior acts automatically when the policy is cancelled. Two types of policies that can accomplish this goal would be:

  • Modified claims made or prepaid tail coverage
  • Occurrence coverage

The other type of coverage is “Claims Made” coverage. This type of policy is traditionally the least expensive when starting a practice, but does require some exit strategy planning. Most insurance carriers have rules that allow for a free tail to be earned over the course of their practice history. Some examples that I have seen include (always review the policy for specific details):

  • Free tail upon death of a physician
  • Free tail upon permanent disability
  • Free tail upon permanent retirement – often there is an age and consecutive years insured by a carrier stipulation

A claims made policy may provide unique advantages over other policies especially for a start up practice:

  • Flexibility in design – ability to change limits
  • Financial savings
  • Ability to purchase higher limits

With proper planning a Claims Made Medical Malpractice policy may be right for you. For more
information on what type of policy (Claims Made, Modified Claims Made, or Occurrence) is right for your practice contact Kelly Reed | 906.315.7227 | kellyr@vastsolution.com.

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