Medical professional liability insurance, also known as malpractice insurance, covers health care professionals for errors arising from treating patients. These policies pay defense costs and generally cover claims for medical error or neglect, even if the claims are without merit.
Physicians are not required by law to carry malpractice coverage. But coverage is required for hospital privileges, employment contracts, or payor contracts.
There are two types of medical malpractice insurance
Claims-made — protects you during the current policy period, usually one year. If you do not renew your claims-made policy, you no longer have coverage for any claims that may be filed in the future that are alleged to have occurred during the time your policy was in force. With a claims-made policy, you will need to purchase tail coverage.
Occurrence — provides ongoing coverage for events that occur during the policy period, even if they are reported after the policy is cancelled. You do not need tail coverage with an occurrence policy.
Claims-made policies are typically less expensive than occurrence policies for the first several years. This is because the potential for claims builds slowly as policy years accumulate.
Here are two examples that illustrate the differences between claims-made and occurrence.
- A physician purchased an occurrence policy effective from June 1, 2010, to May 31, 2011. In August 2010, the doctor performed surgery on a patient. In 2013, the patient filed a claim alleging negligence related to the surgery. With an occurrence policy, the policy bought in 2010 covers that claim.
- If the physician bought a claims-made policy in 2010 and did not renew the policy or purchase tail coverage when the policy expired in 2011, there would be no coverage because the claim was made after policy expiration. However, if the physician bought tail coverage in 2011, then the tail coverage policy would cover the claim.