Choosing Policy Limits for Malpractice Insurance

DoctorInsuring your medical practice means getting malpractice insurance. However, policies differ among themselves. That’s why it’s appropriate that you choose the most appropriate limits and coverage options to provide the business with the most-comprehensive protection. What limits and extensions should you consider adding to your policy to cover your business effectively?

The medical malpractice insurance industry is a very complex one, and there are many policies—any given one may or may not work appropriately for your facility. Make sure you have the one that will effectively cover everyone within the practice in the appropriate ways.

Understanding Malpractice Coverage

Medical malpractice insurance is a type of liability insurance. It helps medical professionals—doctors, nurses, medical students, hospital boards and other care providers—protect themselves in case they or their employees make mistakes that harm patients.

In other words, if the physician makes a mistake while treating a patient, and that patient subsequently dies, their family might be able to sue the doctor’s office for the losses caused by that death. Ideally, the liability policy can help the physician compensate the family for their losses. It can ensure that the harmed party receives that money, without putting the physician or facility for a significant financial loss. Both parties have a better chance of recovering from the loss.

The Limits to Malpractice Policies

However, like all insurance policies, medical malpractice policies will include limits. They will only pay a maximum amount of money for the losses a client claims. For example, the National Center for Biotechnology Information states that most policies will offer a maximum settlement both per claim and overall in a single policy period (usually one year).

For example, most policies offer between $100,000 and $300,000 per claim per period. If a doctor makes a claim, and they have $250,000 in assistance available per claim, then the policy will pay up to $250,000 for that one claim. If the physician has to file another claim during on that policy, then that claim will also only be eligible for up to $250,000 in coverage, also.

However, that person’s policy might offer $2.5 million in maximum coverage per policy period. That means that the policy will only pay up to $2.5 million during the policy’s active term. So, if your facility has faced multiple claims, which together total $4 million in losses, you will only be able to receive up to $2.5 million for the claim. That’s a potential $1.5 million gap in coverage.

That’s why it is important that you work with your insurance agent to determine the policy limits that will most appropriately address your facility’s coverage needs. It’s important that you carry adequate coverage for your highest financial risks. However, you shouldn’t carry too much coverage, either. Speak to your agent about the best way to balance your policy limits.

What Coverage Will Exclude

Your medical malpractice policy won’t cover all types of losses. Of course, if a claim exceeds your policy limits, then you’ll have to pay for the difference in the limits.

However, your policy might not cover certain claims at all. For example, if someone causes harm to a patient through a criminal act, then the policy likely will not apply. Policies might not cover inappropriate alterations to medical records, either, which is also illegal in most cases.

One important thing that your policy might not cover is a claim that arises several years after the policy that was active when the event occurred was active. A type of policy called a claims-made policy will only apply coverage if the alleged malpractice and the claim are filed while the policy is still active. Once the policy expires, your practice might need a tail insurance supplement, which means that you can file against an older policy even if that policy is no longer active. Talk to your agent about whether your policy falls into this category.

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