As a medical professional, you may need medical or professional liability insurance during your career. According to a Johns Hopkins University study, medical errors are the third leading cause of death in the United States.

 

Moreover, government data shows that around 10,800 medical malpractice claims were paid in 2022. Research also reveals that nearly one-third of physicians said they’ve experienced at least one lawsuit in their professional careers. These findings underline how crucial having adequate coverage is for a healthcare professional. 

 

Carrying the right insurance gives you financial coverage, helps you uphold your professional standing, and fosters patient trust and confidence. However, with the different types of medical liability insurance for nurse practitioners, doctors, and dentists, how do you find the right one for your practice? 

 

Types of Medical Professional Liability Insurance

Medical professional liability insurance policies come in two primary forms: claims-made policies and occurrence policies. Though they both protect you, understanding their differences is essential in selecting the one that best suits your practice and personal risk preferences. 

 

Claims-Made Policies 

As its name suggests, claims-made policies cover incidents that occur and are reported as claims within the policy period. This means that for this medical liability insurance to respond, the actual event leading to the claim and reporting the claim must happen while the coverage is active. 

 

Pros of Claims-Made Policies 

 

• Lower Initial Premiums: Claims-made policies usually start with lower premiums that gradually increase over time, making them a cost-effective choice for new practitioners or those with budget constraints. 

• Flexibility with Retroactive Dates: These policies can provide coverage for incidents that occurred in the past. As long as the incident happened after the specified retroactive date and the policy was active when the claim was reported, claims-made policies can cover it.

• Continuous Coverage Option: By purchasing tail coverage or obtaining retroactive coverage you can manage gaps in your coverage and ensure continual protection, even after the policy period ends. 

• Widely Available: Claims-made policies are readily available and offered by most professional liability insurance providers. 

 

Downsides of Claims-Made Policies 

 

• Dependence on Active Policies: Coverage ceases once the policy expires or is canceled unless tail coverage or retroactive coverage is purchased. This potentially leaves gaps in your protection. 

• Potential for Increasing Premiums: Premiums typically increase annually for the first few years to reflect the growing risk of a claim being reported as you build a more extensive patient history. 

• Complexity With Claims Reporting: Timely reporting of claims is critical. If a claim is delayed until after the policy period, it may not be covered unless tail coverage or retroactive coverage is in place. 

 

Occurrence Policies 

Occurrence policies cover incidents occurring during the policy period, regardless of when the claim is made. This distinct feature gives medical practitioners long-term reassurance. 

 

Pros of Occurrence Policies 

 

• Permanent Coverage for the Policy Term: Occurrence policies provide coverage for incidents taking place during the policy term, irrespective of when the claim is filed. This eliminates the need for tail coverage. 

• • Stable Premiums: Premiums for occurrence-based policies do not tend to rise over time. There’s no need to worry about them increasing as the practice grows and the claims risk accumulates. 

• Simplicity: Once purchased, these policies are simple to manage as they do not depend on the reporting period. You’re either covered for the period or not. 

 

Downsides of Occurrence Policies 

 

• Higher Initial Costs: Occurrence policies generally are more expensive than claims-made policies, which can be a deterrent for those early in their careers. 

 

• Coverage Amount: With an occurrence policy, the amount of coverage depends upon the policy in the year of the occurrence. If you had an occurrence policy in 2005 with limits of $200,000/$600,000. This means that you have $200,000 of coverage per incident and up to $600,000 of coverage in total. You currently have an occurrence policy with limits of $1,000,000/$3,000,000. If you just received a claim for an incident that occurred in 2005, it would be covered under the 2005 policy limits of $200,000/$600,000. If your current policy is claims-made, that claim would be covered up to your current limits of $1,000,000/$3,000,000.

 

Potentially Unavailable or Limited: Some insurance carriers may not offer occurrence policies or may be limited in scope compared to claims-made options. 

 

As you choose between these two types of medical liability insurance, it helps to weigh their immediate financial implications against their long-term benefits. 

 

Claims-made policies suit those looking for lower initial costs. However, occurrence policies may prove more economical and less complicated over time, particularly for those considering retirement or changing insurers. 

 

State-by-State Requirements and Considerations

Within the American West, states such as Arizona, California, Colorado, Nevada, and Utah each have their own regulations and considerations that medical practitioners must be aware of. 

 

For example, in Arizona, medical malpractice insurance isn’t mandated by law for physicians. However, many healthcare institutions require practitioners to carry coverage as part of their bylaws. Moreover, without insurance, healthcare professionals expose themselves to significant financial risk in the event of a lawsuit. 

 

California does not have a state requirement for doctors to carry malpractice insurance, except for physicians who perform outpatient surgery. Like in Arizona, many employers in the state look for this type of insurance. 

 

If you’re a medical practitioner in California, it also helps to familiarize yourself with the Medical Injury Compensation Reform Act (MICRA) of 1975. The legislation put a cap on non-economic damages in malpractice lawsuits which helps control insurance costs and shields practitioners like you from excessively high payouts. However, note that this does not limit economic damages for medical expenses and loss of earnings, which remain fully recoverable. 

 

The situation is different in Colorado. In this state, medical professionals must carry the minimum medical liability insurance (a policy with a $1 million per occurrence limit and a $3 million aggregate limit) to legally practice. This helps safeguard both practitioners and patients in the event of a claim against professional negligence. 

 

Although seemingly unusual, Nevada does not require medical practitioners to carry professional liability insurance. The state also does not impose any minimum requirements for carrying one. However, you may find that getting this coverage is beneficial and even crucial to your practice, especially with the state’s latest regulation. 

 

Nevada introduced AB404 on January 1, 2024. This regulation increases the compensation limits for non-economic damages in medical malpractice cases by $80,000 yearly starting on the date it was introduced and through January 1, 2028. Furthermore, from January 1, 2029, there will be an annual increase of 2.1% to ensure it keeps pace with economic changes. 

 

Lastly, carrying malpractice insurance isn’t a state mandate for physicians in Utah. Yet, specific hospitals and healthcare facilities might require doctors to have it to practice on their premises.

 

While the requirements vary across these states, the importance of adequate malpractice cannot be overstated. It’s crucial that you understand your state’s specific laws and regulations or, better yet, seek professional guidance to make an informed decision about the coverage that best suits your practice’s needs. 

 

Get the Coverage You Need To Serve Your Patients With Confidence

At InsureGen, we specialize in guiding medical practitioners through the maze of insurance options to find the coverage that best suits their needs. Whether you’re obtaining medical liability insurance for the first time or renewing coverage, our team of experienced advisors is here to provide personalized support every step of the way. Contact InsureGen today to get a quote.