The rising healthcare expenses have left providers scrambling for effective cost-cutting strategies. In this battle between maintaining a practice and adopting cost-effective measures, we sometimes compromise on vital elements that ensure a safety net. One such area is malpractice insurance.
Malpractice insurance (professional liability insurance) protects medical professionals against medical lawsuits. With malpractice insurance premiums skyrocketing, many providers opt for cheaper alternatives to stay sustainable. Unfortunately, this cost-cutting approach could prove detrimental in the long run.
An AMA report suggests that 1 in 3 healthcare providers face a medical malpractice lawsuit at some point in their careers. Moreover, with clinical error rates from medical interventions ranging between 3% and 16%, it's evident that skimping on insurance coverage is a risky gamble. The costs of a single lawsuit can far exceed the savings from reduced premiums, potentially leading to financial ruin. Additionally, a subpar insurance policy may not provide adequate legal defense or cover all potential damages, leaving healthcare professionals vulnerable to significant out-of-pocket expenses.
Furthermore, underinsurance can impact a provider's confidence due to the lack of protection in a legal battle. Join us as we discuss the core factors to consider when selecting malpractice insurance and tips to ensure you get the best deal.
The medical malpractice insurance market is volatile, with fluctuating premium rates based on specialty, location, and claims history. The rising premiums and shrinking insurance coverage can force healthcare providers to seek more effective options. However, making a hasty switch without careful consideration can backfire.
Here are vital factors to consider when evaluating and narrowing down your malpractice insurance.
Before considering a new malpractice insurance policy, evaluate your current coverage. Ask yourself:
Opting for a lower premium might save money in the short term, but could result in inadequate coverage, leading to higher out-of-pocket costs later.
When determining your policy limits, consider your specialty. Specialists, surgeons, and radiologists are more prone to indemnity payments due to diagnosis-related failures or errors during medical procedures. While the average policy for most physicians is around $1 million, surgeons and specialists typically need a higher safety net of $3 million.
Another aspect to verify is financial stability. Companies offering unusually low premiums may face financial difficulties or even bankruptcy before your policy term ends, potentially leaving you without coverage when in need.
One crucial factor when transitioning to a new insurance policy is the retroactive date of your current policy. This date ensures that you remain covered for incidents that occurred while under your old policy, preventing coverage gaps. Since most policies are claims-made, reporting any suspicious claims to your current insurer before the retroactive date is imperative to avoid financial burdens.
If your existing policy lacks retroactive coverage, you can purchase tail coverage from your current insurer or request nose coverage from your new insurer. Get quotes for tail and nose coverage to choose the option that best suits your needs.
Some policies deduct defense costs from the coverage limits, reducing the amount available for settlements or judgments. These are called eroding policies. Defense costs include fees for defense attorneys, expert witnesses, court reporters, and clerical work. Eroding policies can diminish your financial protection. For example, if you have a policy with a $1 million limit and $200,000 in defense costs, only $800,000 remains for settlements or judgments.
Consider non-eroding policies, where defense costs are covered outside the policy limits, ensuring you have robust protection. If your policy caps overall defense costs, choose one with a high enough limit to cover defense costs and settlement amounts.
Malpractice insurance serves two critical purposes: protecting you against financial loss and preserving your practice's reputation. However, in some cases, insurance carriers may choose to settle a lawsuit, even one that's frivolous, because the cost of defense could exceed the settlement amount. Unfortunately, every settlement must be reported to the National Practitioner Data Bank, potentially impacting your reputation, insurance status, ability to participate in managed-care groups, and applications for hospital privileges.
Before signing a new contract, you must verify if it includes a consent-to-settlement clause. This clause requires the carrier to consult with you before making any settlement offers or counteroffers, giving you greater control over decisions that could affect your professional standing.
Healthcare digitalization and interoperability have enhanced care delivery, but heightened the risk of cyber threats. As you explore new insurance options, it’s vital to consider this growing danger.
Cyber liability coverage within your malpractice policy protects against data breaches, cyberattacks, and other digital threats that could jeopardize patient information.
Sexual abuse allegations, whether proven or not, can be devastating to a provider’s career. Most insurers don’t cover sexual abuse allegations. Nevertheless, discuss the viable options to safeguard yourself against any potential accusations while offering professional services and avoid costly legal proceedings, regardless of the outcome.
If your practice offers telemedicine services, it's important to check whether your insurance company covers telemedicine malpractice. Since telemedicine regulations can be complex and may restrict you from providing services outside your county, ensure your insurance includes protections for cross-state practice and issues related to virtual consultations.
Providers using non-FDA-approved remedies or treatments may face higher risks of malpractice claims. If you are one of them, ensure your malpractice coverage addresses these risks, including any legal implications of off-label use.
Medical malpractice verdicts are becoming increasingly expensive, with verdict awards exceeding $10 million. Moreover, the medical malpractice insurance market is projected to grow at a CAGR of 13.14%, driving up premium costs.
While cutting corners on malpractice insurance isn’t the right approach, there are ways to lower your premiums. Here's how:
Your expertise as a physician is crucial, but consulting a knowledgeable insurance broker is a smart move that ensures you get the best coverage. Brokers are connected to different insurance carriers and can provide multiple quotes, helping you find the most competitive rates and suitable coverage options. Analyzing at least 4-5 quotes gives you a better grasp of the market, enabling you to make the right decision.
Who doesn’t love a good discount? And when you find one, make sure you grab it!
Here are some malpractice premium discounts you should explore:
Enrolling in a risk management program can enhance your skills in minimizing risks and handling potential claims. Many insurance companies offer discounts to practitioners who complete these courses, as they demonstrate a commitment to reducing the likelihood of claims and improving overall practice safety.
When switching to a new insurance policy, don’t focus only on short-term benefits — take a broader view. Think about your long-term plans:
These factors can influence your coverage needs and could potentially reduce your premiums.
Insurers view board-certified physicians as lower-risk clients because the certification reflects a strong commitment to excellence and adherence to industry best practices, often reducing premiums.
Securing the best deals for your malpractice insurance demands understanding the market, meticulously analyzing contract terms, forecasting your practice needs, and availing discounts. Above all, a proactive stance on managing malpractice risks ensures financial stability and elevates the quality of care in your practice.
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