Physicians Professional Liability Insurance: Staying Ahead of the Details, by Andrew J. Kelly, RPLU
The medical profession has been the subject of countless frivolous lawsuits over the years. The accompanying spike in lawsuits have contributed to a concern among many policyholders that coverage is often too expensive to maintain, and is difficult to understand when attempting to determine if a policy is placed correctly. The medical professional liability space is fraught with numerous potential pitfalls and opportunities for a mistake to be made at the expense of the insured. It is critical that the agent and insured work together so that the details of how the practice functions are accurately translated into the proper policy language so that the policy responds when the insured needs it the most.
Medical professional liability insurance companies essentially write their policy forms backwards when compared with the rest of the insurance industry. Non-medical professional lines policies are usually tailored to offer coverage to the entity as the primary holder of the policy. This setup affords coverage from the top down, since the definition of “who is an insured” automatically provides coverage for the employees of the entity. Occasional details where independent contractors might need to be individually added by endorsement, or another entity might be needed to be added to the coverage because of a contract are always possible, but the coverage itself is for the most part fairly straightforward since it follows the entity.
The coverage for an individual physician works in the exact opposite fashion. Many doctors automatically assume that any staff and associated entities are automatically covered by their policy. This assumption can be especially dangerous since the coverage follows the doctor, who instead of the business entity, is named as the first named insured. Because the coverage follows the individual instead of the named insured no detail can be taken for granted when it comes to where and with whom the doctor provides services to their patients. Any accidental omission can be the source of an uncovered claim, and additional care on the part of the agent and insured should be exercised so that all parties are on the same page.
Preventing gaps in coverage begins with being sure that any entity that the doctor owns or operates out of or on behalf of is properly disclosed and confirmed as a covered entity as either a first named or additional insured depending on what the situation requires. Additional physicians, physician assistants, nurses, and staff members should be reported and designated by the doctor as to whether or not they should be covered by the policy. If additional entities are filed, (even if it is only for tax purposes) that entity should be reported and confirmed as covered before the entity begins operating. Any potential additional practice employees or independent contractors should be sent and approved prior their initial start date. Additional services other than the services reported and approved at the policy inception date should be discussed and approved prior to the policy start date or before the new services are offered if the addition occurs after the policy is in force. The most common service addition I see is the addition of midterm a MRI or x-ray imaging facility. Making sure the policy is updated and placed correctly especially applies midterm once the policy is in force because as the changes that are most often overlooked are the ones that do not take place during the policy’s renewal process.
Another major area of concern that ought to be handled carefully is the location (or multiple locations) in which the doctor practices. The coverage for doctors is rated specifically with the state and exact location of the practice in mind. If there are multiple locations, each location should be disclosed in writing and confirmed as covered under the policy before the location begins accepting patients. Failure to do so can be the source of a claim denial or policy cancellation in the event the insurance company is not notified in a timely manner. If the practice has multiple locations across several states this becomes even more important as an insurance company will not provide coverage for a location in a state that it has not rated for and specifically addressed via endorsement or, in some cases, an entirely new policy in situations that one policy will not suffice due to restrictions in underwriting guidelines. In addition, there are state funds in a handful of states that can be useful to the insured but cannot be utilized and properly navigated if the insurance company and agent are not aware the insured is operating in the applicable state.
An open line of communication between insurance agent and doctor is key to preventing uncovered claims and minimizing the cost of coverage. As an insurance broker, my goal is doing all I can to make sure that the policy is correctly written, and that all sides are aware that the policy must change in real time as the needs of the practice grow during each policy year.
Andrew J.Kelly, RPLU
Alexander J. Wayne & Associates, Inc.
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