Physician Occurrence Insurance

Occurrence-based insurance is a type of medical malpractice insurance which protects the physician from liability arising from care that results in a patient’s injury or death.

An occurrence-based policy differs from claims-made in that an occurrence-based policy covers any claim for an event that took place during the period of coverage, even if the claim is filed after the policy expires.  Thus, an occurrence-based insurance policy does not require tail insurance.   

How Much More Does Occurrence Insurance Cost?

Since tail insurance is not needed under an occurrence-based insurance policy, the annual premium for an occurrence-based policy is approximately 35% more than a claims-made policy.  So, if the average claims-made policy annual premium is $6000, an occurrence-based policy would cost $8100 in coverage. The American Medical Association provides resources to find affordable insurance.

The cost of coverage is based upon the claims history of the provider and the number of individual and group patients seen per year. Providers with high annual patient visit counts will have a lower insurance premium, since their claims are spread out over more people.

Additionally, doctors who perform below average in terms of malpractice claims will pay less than providers who incur higher claim rates.  A doctor’s risk profile is also taken into account when determining the rate an insurance company will charge for the occurrence-based policy.   Provider age is also factored into the equation, as younger physicians are considered to be at higher risk of committing malpractice or making an error than older practitioners.

What Is the Advantage of Occurrence Based Coverage?

The permanence of an occurrence-based policy is the main advantage over a claims-made policy.  The period of time you are protected under the policy lasts forever and you do not need to renew or buy tail insurance when you leave the employer. You can also take a job in another state, and you will still be covered.

One disadvantage of an occurrence policy is that if the doctor leaves the practice or hospital (in most cases), they may not be able to remain on the same occurrence-based policy with their former employer. The main reason for this is that the insured typically must have had prior experience as a provider in order to qualify for an occurrence-based policy – with or without tail insurance. Discover whether a claims-made or occurrence policy is best for your situation.

Malpractice insurance is a type of professional liability coverage that helps protect physicians and other healthcare professionals from the financial risks associated with lawsuits in which patients believe they were harmed as a result of an incident involving medical care. The amount of coverage depends on how much the policy is worth (premium) as well as your specialty – personal injury attorneys are more likely to take cases against doctors working in hospitals than those who practice family medicine or internal medicine in private practice.

Most malpractice insurance carriers provide coverage that has a deductible clause that can range anywhere between $0 -$100k per incident with most doctors opting for higher deductibles due to lower premiums. A deductible clause in a malpractice policy stipulates that the insurance company will not provide coverage for any expenses incurred by the insured for injuries or damages up to an agreed-upon amount. A deductible clause in a malpractice policy stipulates that the insurance company will not cover any expenses incurred by the insured for injuries or damages up to an agreed-upon amount per incident. The typical carrier’s deductible is usually $5000, but it can be higher, sometimes as high as $50,000 depending on individual state requirements and claims history.

Should a Physician Choose Claims-Made or Occurrence Malpractice Insurance?

Policy Deductibles

However, some states have limits on how much of a doctor’s income can be subject to such deductibles before he must buy additional coverage known as “excess” coverage.” The standard excess limit is 50 percent the doctor will make in annual gross salary

Malpractice policy provides legal defense coverage to the doctor from medical liability arising from clinical care that results in injury or death. Each policy period provides limits; which are the maximum amount an insurance company will pay per event. Thus, if your insurance policy has a limit listed of $1,000,000 per occurrence if there is a settlement or judgment, that is the maximum amount your medical malpractice insurer will pay towards claims filed within the term outlined in your policy.

Tail Not Needed for Occurrence

Tail Insurance, also known as Extended Reporting Period coverage, must be purchased when a physician has claims-made professional liability insurance coverage.  Tail insurance covers the gap between when a physician leaves an employer and when the statute of limitations on filing a medical malpractice claims ends. 

Malpractice coverage is a type of professional liability coverage that helps protect physicians and other healthcare professionals from the financial risks associated with lawsuits in which patients believe they were harmed as a result of an incident involving medical care. The amount of coverage depends on how much the policy is worth (premium) as well as your specialty – personal injury attorneys are more likely to take cases against physicians working in hospitals than those who practice family medicine or internal medicine in private practice.

Most malpractice insurance carriers provide coverage that has a deductible clause that can range anywhere between $0 -$100k per incident with most doctors opting for higher deductibles due to lower premiums. A deductible clause in a malpractice policy stipulates that the insurance company will not provide coverage for any expenses incurred by the insured for injuries or damages up to an agreed-upon amount. A deductible clause in a malpractice policy stipulates that the insurance company will not cover any expenses incurred by the insured for injuries or damages up to an agreed-upon amount per incident. The typical company’s deductible is usually $5000, but it can be higher, sometimes as high as $50,000 depending on individual state requirements and claims history.

A good rule of thumb is tail coverage costs around 2 times your annual medical malpractice insurance premium.  Thus, if your annual premium costs $6000; your tail cost would be around $12,000.  Your tail insurance cost is a one-time payment; it is not an annual cost. 

The cost of insurance coverage is based upon the claims history of the provider and the number of individual and group patients seen per year. Providers with high annual visit counts will have a lower insurance premium, since their claims are spread out over more people. Thus, the choice of claims-made or occurrence is important.

Additionally, doctors who perform below average in terms of malpractice insurance claims will pay less than doctors who incur higher claim rates. A provider’s business risk profile is also taken into account when determining the rate an insurance company will charge for the occurrence-based policy. Provider age is also factored into the equation, as younger doctors are considered to be at higher risk of committing acts that could lead to liability or making an error than older practitioners.

Retroactive Dates

A retroactive date defines how far back in time a medical loss can occur for your policy to provide coverage to claims. If a claim happens prior to the date the policy is retroactive, the insured’s policy won’t provide coverage from the company. It’s a feature of claims-made professional liability coverage.

In addition to being subject to cancellation upon leaving employment, claims made policies are designed to protect only against first time occurrences.   If there was an initial claim under a claims made policy then any following claims would not be covered by that same policy.  

A claims-made policy will only provide insurance coverage if the policy is in effect when both the incident first happened and when a lawsuit is filed against the doctor (when the claim is filed). Thus, there is a chance a lawsuit can be filed after a doctor leaves an employer. In situations like this, with claims-made medical malpractice insurance, a tail policy must be purchased by the provider which covers the gap between when physicians leave an employer and when the statute of limitations on filing a medical malpractice claims ends.

Claims-made coverage is used in cases where there may be periods of time when the reason coverage is not available, such as changing jobs. In these situations, the tail policy will provide protection for up to three years after leaving an employer (depending upon state law and the physician’s insurance carrier’s basis for coverage). The tail policy also has other limitations and exclusions which can make it difficult for providers who leave employers often or have a history of high liability claims against them to find affordable malpractice insurers.

Claims-Made Medical Coverage

A claims-made policy will only provide insurance coverage if the policy is in effect when both the incident first happened and when a lawsuit is filed against the doctor (when the claim is made). Thus, there is a chance a lawsuit can be filed after a doctor leaves an employer. In situations like this, with claims-made medical malpractice insurance, a tail policy must be purchased by the medical provider which covers the gap between when doctors leave an employer and when the statute of limitations on filing a malpractice liability insurance claims ends.

Claims-made coverage is used in cases where there may be periods of time when coverage is not available, such as doctors changing jobs. In these situations, the tail policy will provide coverage from liability for up to three years after leaving an employer. The tail policy also has other limitations and exclusions which can make it difficult for doctors who leave employers often or have a history of high liability claims against them to find and fund affordable medical liability insurance coverage.

Assuming claims-made coverage is in effect, a good rule of thumb is tail insurance costs around 2 times your annual malpractice insurance premium.  Thus, if your annual medical premium costs $6000 per year; your cost paid to the insurance carrier would be around $12,000.  Your tail insurance cost to the carrier is a one-time payment; it is not an annual cost.  

The physician’s employment agreement will specify whether employers or physicians should cover expenses for the tail insurance if it is claims-made insurance.

The financial benefits gained from having your contract reviewed and negotiated by an experienced healthcare attorney far outweigh the costs associated with a review. You are a valuable resource, and you should be treated and respected as such. Attorney Robert Chelle will personally dedicate his time to make sure that your are fully protected and will assist you in the contract process so that your interests are fairly represented.

If you have questions about claims-made or occurrence coverage and your current malpractice insurance or are interested in having your employment agreement reviewed contact Chelle Law today.