One of the distinct advantages of being a resident is having the space and time to learn from our mistakes and hone our skills, all while being supervised by a more senior doctor who is ultimately responsible for our decisions. This can be comforting, knowing that we have the backing of knowledge and learned experience. Additionally, it means we do not have to worry about the burden of malpractice insurance in’s-and-out’s during these training years.
Unfortunately, many residents graduate residency without thorough understanding of how malpractice insurance works, and the ways to ensure coverage that is comprehensive. The peace of mind that comes from understanding exactly the type of coverage needed cannot be understated.
Claims-Made Coverage
This type of insurance applies to any alleged malpractice that occurs during the distinct period of time that the policy is in effect.
Premiums for claims-made coverage are typically cheaper in the first few years, because there tends to be a lag between the date of care provided and date of filing of claims. The premiums tend to increase over time until they reach a previously determined “maturity” point.
One advantage of this policy is that the “liability limits”- the maximum amount that the insurance company will pay-out in a given claim- can be adjusted over time.
The important thing to remember with claims-made is that once the policy is terminated, there is a chance that you could encounter a claim pertaining to the prior period of time during which you were being covered by said policy. For example: You were covered by policy A from July-June of 2019. You then switched to policy B in July 2020. In October 2020, you receive notice of a claim for care that occurred in September 2019. At this point, you are no longer covered by policy A, and policy A is no longer responsible for coverage.
Nose and Tail Coverage
These two concepts and coverage types address the abovementioned dilemma. Tail coverage is very important to consider when switching from policy A to policy B, or when simply terminating policy A. It guarantees continued coverage for any claims that come in after leaving policy A, if the date of the care administered falls under the former policy A’s window. Prior to purchasing a claims-made policy, it is important to make sure that your policy ensures the right to tail coverage. The cost of this type of coverage tends to vary based on specialty, geographic region, and length of the actual primary policy.
Nose coverage, which is slightly less common than tail coverage, refers to coverage that is initiated by policy B, but which pertains to claims that occur during policy B coverage for dates that fall within policy A’s policy duration.
Occurrence Coverage
This type of policy addresses the issue of nose-tail insurance needs. It covers any alleged incident that occurs or occurred during the duration of coverage, regardless of when the claim is actually filed. This type of insurance tends to be more expensive because it is based on projections that seek to estimate what, if any, claims may occur. There is no need for nose or tail coverage with occurrence coverage. So, if Policy C covered you from January 2020-January 2022, and as of February 2022 you are retired, Policy C will apply to a claim made in March 2022 in regards to an incident from March 2020. Of note, fewer employers offer this type of coverage given the increased cost.
Claims-Paid Coverage
It is very important to recognize that while “claims-paid” sounds similar to “claims-made,” this type of insurance is quite dissimilar. For claims-paid insurance, one needs to remain a subscriber to this policy for the duration of whatever claims were made during the coverage window. That means, if you are insured under policy E starting in January 2022, and an alleged adverse event occurs in March 2022. In August 2022, a claim is made regarding this event. The case might not close until, say, November 2024. You will not be able to utilize coverage from policy E for this event until November 2024, and therefore must continue paying premiums for policy E the entire time (35 months). Claims-paid policies are sometimes worded such that you are limited in what changes you can make once belonging to this policy, including changing jobs.
As you can see, the medical malpractice insurance landscape is complicated and can be confounding even for those of us with advanced degrees and seemingly high levels of competence. While doctors might be used to working independently as experts in their field, picking out an insurance pertaining to malpractice coverage really requires the input of someone who specializes in this field. When navigating job offers and contracts, it is advisable to consult with a lawyer and/or more senior physicians for advice and practical suggestions. These decisions can have massive personal, professional, and financial implications for years to come!
