Also known as medical malpractice insurance, professional liability coverage protects healthcare workers from financial risk associated with patient bodily injury, medical expenses, and property damage. As with any legal-laden issues, the cost associated with risk mitigation can be substantial. And it’s not solely about paying claims, because insurers also spend a considerable amount of money investigating and defending claims before a suit ever makes it to court. With so much money at risk, proper insurance coverage is a necessity.
There are two basic types of coverage to consider: occurrence-based or claims-made:
• Occurrence-based: this type of policy covers a loss that occurs during the active insurance policy period, even if the claim is filed after the policy is cancelled.
• Claims-made policy: this type of policy covers any claims reported during the active policy period, regardless of when the injury/loss happened.
Outside of either of these types of coverage, providers should also consider purchasing extended reporting endorsement (tail) coverage, which indefinitely extends the time during which claims may be reported. Tail coverage can be very expensive to purchase due to its perpetuity of liability.
Due to the fact that claims can be made long after the date of service, premiums for claims-made policies are lower than occurrence-based policies. However, in order to balance out the risk, claims-made policy rates increase rapidly year-over-year.
Professional liability coverage is mandatory due to the large financial risk at stake. Policies can be underwritten by individual insurance companies or collective risk retention organizations. Very large healthcare organizations are sometimes self-funded, wherein they establish an account or trust to pay these types of expenses.
It’s important to note that not all liability comes from medical errors, so your liability insurance also needs to cover expenses related to data breach mitigation and regulatory requirements, such as HIPAA compliance.
Contact us today if you have questions about what type of coverage is best suited for your practice. We would be happy to help you review your options.