Medical malpractice insurance covers a hospital against instances where death or great harm are caused. Malpractice insurance is often available through traditional insurance carriers. Before selecting which insurance is best for your firm, it is highly advised to consult a professional medical insurance consultant or institutional risk manager to discuss options. You should also check to see if the state/country of the said hospital has a minimum carrying requirement. In the USA, more and more states are requiring the hospitals have some sort of coverage against this occurrence. There are several different types of malpractice insurance with varying costs. The two most common types of Medical Malpractice Insurance are Claims-Made and Occurrence, but there are a few more that pop up for specific scenarios.
Claims-Made Insurance
Claims-made insurance covers policy holders for alleged acts of malpractice that take place and are reported during the time that the policy is active. This policy will not cover any incidents that are reported after the claims-made policy has expired. These policies tend to have little activity when they are first enacted because claims are often not filed directly after an incident.
Since there is such a long period of time between incidents and reports, there is bound to be some margin of error if the said hospital was to switch malpractice insurance. For instance, if a patient dies in a hospital that is covered under claims-made insurance and is reported after switching to another insurance, then that instance is not covered. To compensate for this said hospital might want to purchase Tail Coverage or Nose Coverage in addition to their new insurance.
An advantage of claims-made insurance is that it is often the most cost-efficient option. They are also advantageous in that you can ensure the risks from services you have provided in the past; meaning you can adjust your policy limits and deductibles to meet inflation. On the other hand, these policies tend to be complex and difficult to work with.
Tail Coverage
If one chooses to cancel their claims-made policy or switch to another insurance there will be an uncovered period of time where you are not covered. Tail coverage covers a firm from any incident that is not been filed until after said claims-made policy is no longer covered. This only applies to claims-made policies and not occurrence policies.
Tail Coverage will protect your prior acts even after you cancel your claims-made insurance. The cost for tail coverage can be difficult to pinpoint, so it is best to discuss it with a professional medical insurance consultant before making a decision. Typically, insurers will charge a fixed percentage of your professional liability insurance policy cost; this is often somewhere between 100-300% of your final premium. Keep in mind that tail coverage tends to cost more depending on how far back the incident goes. The cost of tail insurance can go up to twice the typical malpractice premium.
Nose Coverage
When you set up claims-made insurance, the first date of coverage is called the retroactive date. This date excludes you from any claims that happen before it. Nose Coverage, or Prior Acts Coverage, is coverage that allows you to change your retroactive date to the start date of your new coverage. Nose coverage provides protection for instances prior to your past policy. Tail coverage only applies to your incidents that happened when you were covered, yet was filed after your coverage expired. It is important to remember this distinction when changing insurances.
Occurrence Insurance
Occurrence coverage will cover you any time after the policy has been enacted. If an incident was to happen during the policy, it will still be covered if reported after the policy is retired. Likewise, there is no need for things like tail insurance, since future is always covered from past mistakes. There is also no need for prior acts coverage is needed when changing insurance.
Occurrence seems like the optimal policy to go with, but it is not frequently offered by employers. In addition to that, occurrence policies are often more expensive than claims-made insurance. Cost tends to not be a huge issue when selecting insurance, it is more so what works best for your business.
Cost of Malpractice Insurance
It is difficult to say what the cost of your insurance will be without getting a quote. It is crucial to discuss payment options with a professional medical insurance advisor prior to making a decision involving a new medical malpractice policy. There are many variables that will influence your rates, such as insurance type, location, practice, number of employees, and liability. For example, on average malpractice insurance can be approximately $13,000 in Minnesota, but it would cost over $22,000 in California, Surgeons tend to pay more because they have more liability than the average dentist; a surgeon has a higher risk of incident. In addition, occurrence insurance is far more expensive than claims-made. This might be because occurrence must cover a wider timeframe. The typical malpractice insurance will range anywhere between $5,000 to $20,000 annually.
Sources used
https://www.acponline.org/about-acp/about-internal-medicine/career-paths/residency-career-counseling/guidance/medical-malpractice-insurance
https://www.eqgroup.com/occurrence_claimsmade_explained/
https://www.gallaghermalpractice.com/blog/post/going-bare-are-doctors-required-to-have-malpractice-insurance
http://www.camedicalmalpractice.net/purchasing.htm
https://www.trustinsurance.com/resources/articles/malpractice-insurance-101-claims-made-vs-occurrence-coverage
https://www.insureon.com/insurance-glossary/tail-coverage
https://www.insureon.com/insurance-glossary/nose-coverage
