Important Questions to Ask when Purchasing Medical Professional Liability Insurance
Malpractice Insurace Considerations:
You want to be sure you have an incident sensitive form/policy. This means that when you report a bad outcome to the insurer that they register and accept it as a claim. Some insurers only accept lawsuits or demands for money as a claim. These forms are called non-incident sensitive policies and should be avoided.
When purchasing claims made coverage be sure to ask what the tail options are. The insurer should offer a lifetime tail coverage option. Some insurers only offer 1 year to 3-year tail options. These are called limited tail features and should be avoided. Perfusionists face long term tail exposures from pediatric cases and from the dependents of the adult claimants when they come of age. Also most perfusionist have the wrong idea of how the statute of limitations works. In most states the statute is applicable from the date of discovery of the bad outcome, not the date of treatment. The statute of limitation for the adult claimant almost never applies to the plaintiff’s children. When they come of age they have a specified time period to bring a claim as well. Lastly, many hospitals require long term tail options due to reason stated above.
Ask how the limits of liability apply. A preferred insurance product provides a limit per perfusionist. The coverage will still limit the maximum paid in any one claim per occurrence limit on the policy. Inferior coverage will only give a single limit for all insured.
Ask if your policy will have a deductible. Understand this will be an extra cost to you in the event of a claim.
Make sure your coverage has the defense expense outside the limits of liability. Some insurers have the defense expense inside the limit meaning that the cost of defending and managing your claim reduces your limit of liability. Most hospitals do not accept defense expense inside the limit.
Most perfusionists will have 1st year claims made coverage when purchasing a claims made policy. You need to ask what the eventual cost will be if the rates were to be the same in future years. Most 1st year claims made policies go up each year for a 3 to 5 year period. You need to know how many years and what the cost will be at the peak increase. This will enable you to tell if the insurer is low balling the first year premium to acquire your insurance but will have much higher cost for you later. Beware of the insurer who tells you their 1st year claims made rates do not go up each year as well. If there was not increased exposure from the 1st year to the second and then to the third year, then why would they charge more for the tail premium?
You want to be sure the insurer has an AM Best Rating of A IX or higher. There are insurers who are A- rated but they are only one step from being in the B rated categories. B rated category insurers are generally unacceptable to hospitals. Some insurers that are A- rated could pose a risk of having a lower Best rating the very near future that could cause problems for you and your contracts. Not all A- insurers pose the risk of having their Best rating lowered. The IX category refers to financial size. Medical professional liability coverage has proven to be very volatile and an insurer should have significant assets and surplus to back up the long-term liabilities associated with medical professional liability policies. There have been an enormous amount of insurers who gone out of business in the last few years. Some of these failed insurers have impacted perfusionists and left them with questionable past coverage. The financial size and quality size and AM Best rating are very important to insurance buyers.
Ask what the experience of the insurer has been. Have they written Medical Professional Liability for at least 10 years? How long have they covered perfusion? Do they collect at least $250,000,000 in medical malpractice premiums? During the last 7 years 3 insurers who began to offer coverage to perfusionists have pulled out or gone out of business after incurring one catastrophic claim. You want to be sure they have many years of experience writing medical malpractice insurance, have a significant premium base, and understand the catastrophic nature of perfusion or you run a severe risk that your coverage could be non-renewed after a large claim happens from any of the insured perfusionist.
It is important to note that perfusionists have significant catastrophic claims and you need to be absolutely sure that the insurer being considered understands this exposure.
Does the insurer provide substitute coverage without charging a premium? This is applicable for when you take vacations or complete your education requirements.
Does the claims-made policy have special claims-made tail features? Preferred claims made insurance for perfusion groups of 2 or more should not charge a tail premium each time a perfusionist leaves the insured group. The perfusionist should remain on the policy as a covered inactive perfusionist. Without this feature you will be faced with very expensive tail costs everytime a perfsusionist leaves your group. The tail policy should only be offered when the entire group (covered active and inactive perfusionists) leaves the insurer.
Does the insurer offer occurrence coverage? This is important since many hospitals require this type of coverage or may chose another group over yours for a contract due the occurrence coverage feature.
Does the insurer include license protection coverage, personal injury and premise liability? These are important coverages that have been part of perfusion insurance for years.
Norman A. Norton, C.C.P.
President
Mid-Atlantic Perfusion Associates, Inc.
150 Morristown Rd., Ste. 106
Bernardsville, NJ 07924
(908) 766-6819 Office
(908) 766-4593 Facsimile
(877) 587-5065 Pager
[email protected]
