Malpractice Insurance Basics

All clinically practicing PAs should carry professional liability coverage, often called malpractice insurance, during all time periods in which they practice. This insurance covers your exposure to liability arising from your profession, including allegations of malpractice. Liability insurance offers essential financial protection because a malpractice suit can be brought against you at any time after you have seen a patient.

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You also gain professional protection with liability insurance because a malpractice suit can jeopardize your professional reputation and credentials, potentially causing your license revoked or suspended. Even if this does not happen, your malpractice history is the public record that employers can use to disqualify you from future job opportunities. It is therefore vital that malpractice suits are vigorously defended. Insurers will provide legal representation for you to ensure your best interests.

The Value of Having Your Own Liability Policy

Most employers provide some level of malpractice insurance for their employees, but according to CM&F Group, the only way to know for certain is to ask for a certificate of insurance every year to confirm that you are a “named insured.”

Even if you are covered by your employer’s policy, AAPA recommends having a personal liability policy that is portable from job to job and protects your license, your personal assets, and your financial future.

Malpractice 101

Occurrence vs. Claims-Made Policies

There are two types of professional liability coverage available to PAs: occurrence and claims-made.

Occurrence Policies
Occurrence policies cover incidents that happen during the policy period without regard to when the claims are reported. Occurrence coverage provides protection for each policy period indefinitely.

For example, if you had an occurrence policy in 2003 (which you terminated in 2005), and then are sued in 2017 for an incident in 2003, you will be protected.

  • This policy provides coverage for incidents that happened during the policy period, no matter when the claim is filed.
  • You will not need an extended reporting endorsement (“tail” coverage) if you take an extended leave from your career.
  • Premiums in the first few years are more expensive than claims-made policy premiums (until the claims-made policy reaches maturity); over time, the total costs should even out if you consistently maintain your own policy.
  • Occurrence policies are relatively rare since insurers have difficulty estimating the cost of claims long after a policy expires.

Claims-made Policies
Claims-made insurance covers incidents that happen only while the policy is in force; once the policy has been terminated, coverage no longer exists. If you want coverage after the policy has been terminated, then tail coverage must be purchased.

For example, if you had a claims-made policy in 2006 (which you terminated in 2008), and then are sued in 2017 for an incident in 2006, you would not be protected.

  • This policy provides coverage for incidents and claims that are filed during the policy period only.
  • You must keep up with your policy/policies to ensure that you do not have gaps in coverage.
  • This policy is generally inexpensive at first, then gradually increases (“steps up”) over time—about five years—to a “mature” premium.
  • If an incident happened during the policy period, but the claim was filed after the policy expired, then the insurance will not cover that claim.

Tail and Nose Coverage for a Claims-Made Policy

You may need tail coverage if:

  • You take a leave of absence, retire, or switch employers
  • You changed your liability insurers

The tail coverage needed to supplement a claims-made policy can be very expensive because it is covering many potential suits for a lengthy period.

If you are purchasing a policy with a new carrier, an alternative to tail coverage is “prior acts,” or “nose” coverage. You can purchase nose coverage from your new carrier to ensure that claims that happen prior to the new policy do not go uncovered. Nose coverage is less expensive than using tail coverage from your prior policy.

Individual vs. Group Policies

There are two ways to acquire a professional liability insurance policy: through an individual policy or a group policy.

Individual Policy
An individual policy is one that you purchase for yourself. For a PA’s needs, an individual policy is preferred because:

  • You control the proof of insurance. Therefore, you will not need to rely on an employer to verify coverage when you need to, possibly many years after you have moved on to other employment.
  • Since you own the policy, you are the only named insured party. This prevents possible conflicts of interest that can happen when you are on a group policy.
  • A policy of your own provides you with separate limits of liability; your limits will not be reduced because you share coverage with other employees.
  • An individual policy should cover you for any additional job, whether working part-time or volunteering.

Group Policy
Some employers may refuse to reimburse you for an individual policy and insist that you be covered under a group policy. This is because some advantages for individuals become disadvantages for employers. For example, if there were a lawsuit, you would have your own attorney representing your interests. However, employers would prefer a single attorney managing a “global” settlement of any claim, regardless of your personal interest.

Additionally, employers may refuse individual coverage because their insurers will not permit employees to have individual policies. Insurers also want settlement processes as streamlined as possible and do not want to negotiate with your personal attorney.

If you must be covered under a group policy, be sure to:

  • Obtain a copy of the entire policy. If that is not possible, obtain a copy of the “certificate of insurance,” which summarizes the terms of coverage.
  • Verify that you are listed by name on the policy.
  • Verify whether you have occurrence or claims-made coverage.
  • Obtain copies of the policy or the certificate of insurance every year. If it is a claims-made policy, you should continue to get copies even after you have left the employer.

Insurance Carriers 101

There are many types of insurance carriers, and they have varying forms of regulation. The most important factor is evaluating the carrier for its financial strength. An independent rater of financial strength is A.M. Best & Company (Best), which assigns “Excellent,” “Good,” and other designations to insurance carriers.

Avoid any company with less than an “Excellent” rating, denoted by Best ratings A++ (the highest) A+, A, or A-. If a company does not carry any Best rating, this means it does not cooperate with the ratings process and should be avoided.

Where to Obtain Coverage

CM&F offers policies underwritten by an A++ rated insurance carrier. Together, we are continually reviewing the policy terms and annual premiums to ensure PAs have access to the very best today’s market has to offer.

With liability insurance products for full time, part time and moonlighting PAs, plus new graduates, practices, students and PA programs, CM&F will keep you protected throughout your career.

For applications, rates, or a free consultation, contact CM&F Group at pa-protect.com.

 

Additional Resources

FAQs and Myths About Personal Malpractice Insurance

When deciding whether to purchase your own liability policy separate from their employer, you may be wondering why it’s important to have your own coverage. Check out the articles below that feature candid responses from AAPA experts and our partner CM&F Group.

What PAs Need to Know About Malpractice Insurance

Fact-Checked: Myths About Malpractice Insurance

 

Exclusive Discounts

3-Year Premium Discount

Enjoy a 10% discount on your next three-year malpractice premium when you take one of five risk management CME activities in Learning Central.

Affordable Coverage for Full-Time, Part-Time, & Telemedicine

Don’t assume your employer’s liability coverage is enough. Protect your professional reputation and financial future with Professional Liability from CM&F. It covers gaps and lapses in your employer policy – whether you are full-time, part-time, or practicing via telemedicine, you have 24/7 portable coverage.