What to Consider When Buying
The limits of an insurance policy indicate the amount of coverage provided. Most insurance policies list two dollar amounts in the Limits: Per Occurrence/Overall Aggregate. For example a $1,000,000/$3,000,000 policy will pay up to $1,000,000 per incident during the policy period, with a maximum of $3,000,000 during the same policy period.
Circumstances of Potential Coverage Gaps
Some medical professionals may change policies from one insurance company to another every year or so, attempting to get expanded coverage or a lower price. This can cause serious “gaps” in protection because of differences in provisions of the various policies. Coverage gaps can also be caused if a provider experiences a lay off and the organization’s policy coverage is terminated at the same time.
There are two ways to eliminate gaps in coverage: to purchase “tail” coverage or “prior acts” coverage. Tail coverage allows the insured to continue to report incidents and claims beyond the termination date of the policy. Prior acts coverage protects the insured retroactively for those events that may have already occurred but have not yet been reported. A third option is for a healthcare provider to purchase individual coverage that will follow the provider through any job change.
Medical professionals often face decisions regarding continuing their current form of coverage or choosing an alternative form. Now more than ever, healthcare providers must be fully informed to obtain the best available protection without coverage gaps.
In many cases, allied healthcare providers are covered under an employer’s policy, but they may still be liable for their own negligence and may still be liable for all or part of a plaintiff’s award or settlement. In other words, each health provider is responsible for his or her own negligent acts. Purchasing an individual medical professional liability policy with separate limits of liability means the medical professional owns the policy and selects their own limits of liability to meet their type of practice and needs, even if they have multiple positions or do consulting on the side.
Shared vs. Separate Limits
Related to individual liability, with employer-provided coverage, one set of limits are oftentimes shared with your colleagues. If the policy limits are reached in response to a claim filed against a colleague early in the year, they may not be available to respond to another claim in that same policy year. There are benefits to shared limits in that it is less expensive, but you should always be aware of exactly how the policy can respond to a claim.
Coverage in the Insuring Agreement
Many parts of a professional liability policy are similar, covering the professional services of a provider. But there are coverage enhancements that some policies offer and others don’t. Ask yourself what coverages are important to you and make sure your policy offers them (and at what limits). Some coverages to consider are:
- Administrative Hearing Defense Coverage
- Deposition Expense Reimbursement (when you are not named as a party to the claim)
- Lost Income
- Defense Reimbursement for Regulatory Boards
- Legal Entity Coverage
- Consent to Settle Rights
- Shared Limits or Separate Limits
- Professional Boards or Organizations?
- Risk Management Tools
- Locum Tenens – In the case of an Optometrist, will your policy cover an Optometrist engaged to act on your behalf as a replacement while you are absent? If so, for how long?