You need continuous coverage, but there is such a thing as having too much insurance. Plus—should you buy occurrence or claims-made coverage?

Premiums for nurse practitioner and physician assistant malpractice insurance have been rising sharply, more than doubling over the past four or five years.

Typical annual policies now range from approximately $600 for a low-risk general practitioner to $1,600 for a midwife or other high-risk specialist, according to Mark Brostowitz, senior vice president of Marsh Affinity Group, a major player in the NP and PA liability insurance market. In some locations, premiums are much higher. Ann Darlington, president of ARNPs United of Washington State, says nurse-midwives can pay premiums of $25,000 to $30,000 in her state.

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A number of factors account for the trend, including more clinicians, more lawsuits, and more professional autonomy. “The proportion of NPs who are sued has not changed,” says Jan Towers, director of health policy for the American Academy of Nurse Practitioners. “But the number of NPs sued has gone up because the number of NPs overall has gone up.” The average severity of claims, however, has increased, Brostowitz adds.

Perhaps a more significant trend, as far as vulnerability is concerned, is the growing independence of NPs and PAs. In the past, the two groups tended to work in small practices or groups or in clinics and hospitals. Now, they are in outpatient surgical facilities and outreach programs, or they may be self-employed. They may work in a large retail facility, like Walgreen’s or Wal-Mart, sometimes as an employee and sometimes as an independent contractor.

“We’re seeing NPs and PAs becoming more autonomous and working with less supervision,” Brostowitz says. “They share exposure with fewer entities or individuals, so they become more of a target when a patient sues.”

You may need your own policy

NPs and PAs often get their liability insurance through their employers, sometimes as part of the overall compensation package. But is this enough?

“Discuss what’s covered with your employer,” Towers advises. “Check that you’re not in a position in which the physicians can sue you if a judgment goes against them. If that is the case, you may need to carry your own policy as well.”

Cynthia A. Mikos, a nurse-attorney in Tampa, Fla., says your policy should cover disciplinary actions that go before state licensing boards, not just malpractice suits, so that legal counsel is covered in both situations. Employer policies also tend to cover only on-the-job incidents. “Many NPs engage in clinical judgments outside their employment,” Mikos says. “They may be the nurse at their child’s camp, or they may give advice on the phone. If they get sued, it’s not within the scope of employment, so they may not be covered.”

The American Academy of Physician Assistants (AAPA) Web site also emphasizes that personal insurance can eliminate conflicts of interest with other professionals covered by a group policy. A personal policy will enable you to hire an individual attorney and lets you tailor the policy to your specific needs.

Which type of insurance is best for you?

There are two basic types of liability coverage: occurrence and claims-made. Occurrence covers any incident during the life of the policy, even if the suit is filed long after the policy has expired. Claims-made covers only lawsuits brought while the policy is in force. A supplemental policy is necessary to provide protection when a suit is filed later.

Let’s say you carried an insurance policy from 2000 to 2004. An unhappy patient files suit now, alleging harm caused during a visit in 2003. If the insurance was an occurrence policy, you’re covered. If it was a claims-made policy, you’re not—unless you have an “extended reporting endorsement.” Commonly known as a “tail,” this endorsement can cost more than $10,000 in some parts of the country.

Patients have years to file a malpractice claim (the statute of limitations varies by state and type of injury) because the extent of their injury may not be immediately apparent.

“If you had an occurrence policy but don’t have coverage today because you haven’t practiced in 10 years, it doesn’t matter,” explains Calvin Sullivan, associate vice president with CM&F Group, a liability insurance provider for NPs and PAs. “If someone files a suit against you now, you can file a claim with our company and say ‘defend me.’ But, if you had a claims-made policy and do not have a ‘tail,’ when the patient’s claim comes in, you will not be covered.”

That’s another reason the AAPA encourages its members to carry their own policies. “Your own insurance is portable,” says Gary McCammon, president of AAPA insurance services. “You can carry it from job to job,” so there’s no need for tail coverage.Renewing a claims-made policy is the key to continuous, retroactive protection. “If you terminate your employment, retire, or become disabled, then you need a tail,” cautions Brostowitz. “That’s why it’s critical that you not allow your coverage to lapse by forgetting to pay the premium.”

Occurrence policies currently are available in every state except Florida, Brostowitz says, but some companies, like CM&F, offer only the claims-made option. Claims-made policies tend to be less expensive than occurrence for the first few years. That makes them attractive to clinicians who are starting private practices.

Darlington discourages clinicians who have employer coverage from buying their own. “If you have fantastic coverage, you’re a bigger target” for plaintiffs’ lawyers, she says. Towers agrees. “If you make the pockets too deep, you become a target.”

Should you consider having no pockets at all and skip insurance altogether? “I wouldn’t go that far,” Towers says. It would be like driving without auto insurance, warns McCammon. “If you get sued and lose and don’t have insurance, they go after your personal assets,” he warns.“If that’s not adequate, the sheriff will come and liquidate every asset you have.”

Ms. Dembrow is a senior editor for The Clinical Advisor.