Don’t wait until after you’ve been named in a malpractice lawsuit before reading and understanding your liability coverage. There are two types of malpractice policies available to all health-care providers – occurrence and claims-made. They may seem similar at first glance, but there are substantial differences that are worth learning and may even save your career.
An occurrence policy will cover you even if you no longer have a policy with that company as long as you did have that policy when you saw the patient. For example, you had an occurrence malpractice policy through Company A from January 2006 to January 2008. You then leave the practice, change malpractice policies, or leave clinical practice for a job at a university or to raise a family. It’s now 2009 and you receive a malpractice claim for a patient you saw in June 2007. Even though you no longer have the occurrence malpractice policy through Company A, because you had that policy when you saw the patient, company A will now stand by you during possible litigation or a malpractice payout. Occurrence policies are becoming more and more difficult to purchase, and some companies do not offer them at all anymore. If you have a current occurrence policy, you may want to consider holding on to it.
The other option is a claims-made policy, which only covers you as long as you still have that same policy in effect when you are notified of a malpractice claim. To illustrate the difference between the two policies, let’s return to the example used above. From January 2006 to January 2008 you were covered by a claims-made policy through Company B. For whatever reason, you no longer have this policy. It is now 2009, and you receive a malpractice claim for a patient you saw in June 2007. Even though you had malpractice insurance through company B when you saw the patient, because you no longer have that exact same policy with the exact same company, you will not be protected (even if you have a current malpractice policy with another company). Not being protected means you are now responsible for paying legal fees, finding legal representation, and any payments awards to the patient.
Advice for clinicians with claims-made coverage
Because it is unlikely you will have the same employer or malpractice policy your entire career, there are other options for protection. The first is to see if your next malpractice policy will cover you for claims that happen for patients seen in the past (a very unlikely option). The second option is to purchase what’s known as malpractice “tail” coverage. Tail coverage is a policy that will cover you for a set number of years in the event that you receive a claim for a patient you saw while you were insured under your previous claims-made coverage. Using the same scenario from above, let’s say when you left company B you purchased five years’ worth of tail coverage from Company C (from 2008 to 2013). If you receive a malpractice claim in 2009 for a patient you saw in 2007, you will be protected by your new tail coverage. Tail coverage policies can last anywhere from one year to forever, depending on what policy you purchase.
Of course, such peace of mind comes at a price, and tail coverage is not cheap. The average cost for three future years of tail coverage for a physician assistant or nurse practitioner is $10,000. This makes it all the more vital that you know not only what type of policy you have but to negotiate what type policy will be purchased for you by your current or future employer.