Evaluating the Key Aspects of Healthcare Professional Liability Insurance

It is extremely important for healthcare providers to research their medical malpractice and professional liability coverage options. Looking to types of coverages, limits available, coverage included in limits vs. coverage in addition to limits, and of course price, are all things healthcare professionals should be looking at.

BUT remember, price does not equal quality. So don’t let price be your starting point.
Unfortunately, many insurance companies will jump into markets that seem advantageous, and offer really low premiums compared to the competition. This allows them to get a good handle on the market share as quickly as possible. The problem: medical malpractice claims often do not come up for a few years. And as too many insurance claims are made on underpriced policies, either: 1.) insurance rates increase dramatically, or 2.) the insurance company exits the market, leaving their insureds high and dry. This leaves the insured client at major risk.

Economic downturns often leads to hard markets in the insurance industry. As the Coronavirus pandemic brings the world towards this reality, make sure to evaluate the malpractice experience and commitment of any insurance provider, as any insurance company’s solvency is most definitely in question.

What is the difference between an insurance hard market and an insurance soft market? Insurance markets cycle between soft and hard with an increase in claim severity and claim frequency affecting the money insurance companies are paying out. The cycle can coincide with economic downturns, bringing on a hard market. A hard market usually means an increase in premiums, lower limit options, and a decrease in coverage available. An insurance soft market allows insurance companies to keep costs down, while also accepting higher levels of risk and increasing the availability of coverage options.

Evaluate these 5 key aspects of your malpractice coverage details:

1. Occurrence vs. Claims-Made.
   • Although claims-made policies seem cheaper at the outset, you will typically end up paying 200% more for ‘Tail’ Coverage when your policy terminates versus a minimal short-rate cancellation penalty (about 10%) or no cost at all when you non-renew. Claims-made coverage ends up being more expensive because you have to purchase a tail policy. If you cancel your claims-made policy for any reason, you are left unprotected for any claims brought on regarding an event that occurred while you were covered, but after the policy expiration, unless you purchase the tail coverage. Occurrence coverage will protect you for any claim that arises surrounding an incident that happened while you were covered, even if you no longer have that coverage in effect.
2. Consent to Settle:The difference between a Hammer Clause, At Company Discretion and Pure Consent.
   • The consent to settle options are essential. The reason they exist is because it allows insurance companies to maintain control of their own costs; and in an economic downturn, the clause options often become very restricted.
   • The only option that puts you in the drivers seat of your reputation is to have Pure Consent. Pure consent means you decide whether you want to settle or not; and the insurance company will still pay out the full amount up to your limits should you lose at trial. With a hammer clause, you have the option to avoid a settlement, but the insurance company will only pay up to the settlement amount should you lose at trial – the rest of the loss (e.g. trial verdict) would be on you personally. And even worse, At Company Discretion, minimizes the level of input you get in a settlement which is not something any innocent provider wants when it is their name that is on the line.

All of CM&F’s professional liability insurance policies are Pure Consent. We believe in our clients. We know, you as the provider know the best care and what you are doing right or wrong. You should have full consent on whether you want to settle or not if you know you did nothing wrong. We will move forward together with you, and stand behind you through the fight to defend your reputation.

3. Defense Costs.
   • Read the coverage details. Many insurance companies include the defense costs within your policy limits. You want a policy that provides defense costs in addition to your policy limits.
4. Sexual Misconduct Defense.
   • The limits you have on sexual misconduct defense matters. If you know you did nothing wrong, you need to make sure you can afford to clear your name or your reputation can be suffer irreparable damages.
     

     For PTs, who operate in a very hands-on environment, CM&F physical therapy professional liability insurance policies offers limits up to $1M. However, most other professional liability insurance policies CM&F offers are at a $25k limit.

5. Insurance Company Financial Solvency
   • As said in the opening of this blog, the biggest detail to research is to make sure you are fully aware of the stability and history of the liability insurance provider you choose to cover you. You want to make sure you are putting your money and your career with a company that is going to be there when you need it, as reality is that many insurers are also being hit with the implications of these uncertain times.