Whether you’re a nurse or a nurse practitioner, you need malpractice insurance, even when your employer has you covered under their policy. The main reason to have your own policy is to defend your license if you are ever named in a suit. Any policy under your employer typically only covers you for liability, but it does not protect your license. As a clinician, your professional license is the lifeblood of your career. Even if you are found not to be negligent, defending your license in front of a state licensing board could be costly.
Besides protecting your license, you should have your professional liability insurance – even if you work for a hospital or senior care facility – to have an advocate putting your needs first in the event of a claim. If you are only covered by your employer, their insurance company would put the employer’s needs over yours.
Financial concerns are typically the biggest barrier for nurses and nurse practitioners considering professional liability coverage, says Nancy J. Brent, a nurse attorney in Illinois. She recommends considering insurance the same way you would consider getting your clinical license. “You can’t practice without either. When it comes to insurance, you can’t afford not to have it,” says Brent.
Once you decide to get professional liability insurance as a nurse or nurse practitioner, the question is which policy fits your needs: claims-made, occurrence or a tail policy.
Understanding the differences between claims-made, occurrence and tail policies
Let’s start by defining the terms.
Claims-Made Policy
A claims-made policy covers any incident during your policy coverage as long as the claim is made while the insurance policy still covers you.
Claims-made insurance tends to be less expensive than an occurrence policy. According to Brent, it’s undoubtedly a “fine policy,” but it will only cover an incident claimed while the insurance policy is in effect.
For example, if you have a claims-made policy from 2012-2015, and an incident occurs in those years, it would be covered by insurance. However, claims-made insurance will not cover the incident if a lawsuit arises after the policy period is terminated.
Occurrence Policy
An occurrence policy covers any incident during your policy period, regardless of when the claim is made. So, for example, if you have an occurrence policy from 2012-2015, and an incident occurs in those years, you are covered even if the claim isn’t made until after 2015.
Tail Policy
A tail policy extends your coverage if you have a claims-made policy you no longer want. For example, if you change careers and no longer want to maintain your claims-made liability insurance, but the statute of limitations on an incident has not run out, you may want to get a tail policy.
It’s important to consider statutes of limitations for types of injuries that may arise. Negligence or medical malpractice usually has a two-year statute of limitations from the time the incident arose to file a claim, says Brent. The problem is when that’s not the case. If, for example, you work in pediatrics, and there is an alleged injury due to your negligence, the statute of limitations doesn’t end until the child is 18 or even 21. “You would have to keep purchasing claims-made policies throughout the lifetime of all the times that you practice unless you had an occurrence policy,” says Brent.
Tail coverage can cost nearly as much as a claims-made policy. This is why it might make the most sense to get an occurrence policy in the first place so that you don’t need to get tail coverage after you no longer need a claims-made policy.
6 questions to ask an insurance provider when deciding on a claims-made vs. occurrence policy
It’s tempting to rush through the decision of which insurance policy to get when you’re busy changing careers or starting a new job. However, spending a few extra minutes to be informed about your coverage can save you money and decrease stress later.
Following are six questions to ask about a claims-made vs. occurrence policy:
What does the insurance cover?
Be sure your insurance covers your professional license, as well as any malpractice claims. Some insurers only offer claims-made policies for nurses and nurse practitioners. If that’s the case, find out how much a tail policy will cost once the policy is over.
Some policies cover lost income from days taken off work to attend any malpractice claims proceedings or administrative hearings.
What is the coverage amount?
The amount of coverage you need depends on the clinical type of work you do. A nurse practitioner running a private practice will need more coverage than a nurse working in the admissions department of a senior care facility. Speak to your insurance provider about the amount of coverage right for you. “The higher the individual aggregate amount, the higher the policy premium will be, so that’s a judgment call that needs to be made by every nurse individually,” says Brent.
There are two numbers to understand when it comes to coverage. One is the coverage per claim, and the other is the amount per year. For example, if your policy provides $10,000 / $50,000 coverage, that would include $10,000 for individual coverage for a claim and $50,000 for the aggregate amount. This means for the full year, the insurance policy would only cover up to $50,000 for any kind of judgment entered on that policy.
Does your professional association contract with any insurance companies?
There’s power in numbers, so if you’re a member of any professional nursing or nurse practitioner associations, check if they partner with any insurance companies. You may be able to access a better rate that way.
What are your policy obligations?
As the insured, you’ll need to cooperate with your insurance company in case of a claim. This means notifying your agent of any claims made and showing up for depositions or proceedings. “You have specific duties to ensure that the contract between you and the insurance company is maintained, or else they can terminate the contract,” says Brent.
What is the duty of the insurer?
Your insurance provider has a duty to defend you in any incident covered by the policy. They must keep you informed of what’s going on with the suit. “Obviously, the language would be written in the insurance policy, but it’s better to be able to talk with an agent to be sure you fully understand the contract.
What is not covered by your insurance policy?
Malpractice insurance for nurses would not cover criminal allegations, such as criminal charges for the death of a patient or battery of a patient.
Whatever professional liability insurance you decide to get as a nurse or nurse practitioner – claims-made or occurrence – ensuring you’re covered for any incidents while you practice is essential. “Being named in a lawsuit can be overwhelming. But it can be very overwhelming if it all has to come out of your own pocket,” says Brent.
Nancy J. Brent, MS, JD, RN, is a nurse attorney in Wilmette, Ill., representing nurses in disciplinary proceedings before the state agency and board of nursing. She’s also the author of the textbook, Nurses and the Law. This article is not intended as legal counsel or advice. Readers are encouraged to seek legal counsel regarding issues and information contained in this article.
