Physicians and surgeons who are Contemplating buying Medical Malpractice Coverage or are reviewing their current malpractice coverage would benefit from a clearer understanding of how the two types of policies are priced. A better understanding of the premiums could save you significant premium dollars.
The following information applies to most standard market carriers such as MLMIC & PRI.
Both types of policies provide coverage of upto $1.3/3.9 Million (Per claim/Aggregate).
What is an Occurrence Policy?
This kind of policy provides coverage for claims that may arise from incidents that ‘occurred’ while you had a policy in force, regardless of when a claim is reported, even if the policy is no longer in force. Thus, Occurrence coverage provides long-term continuing protection for the physician.
For example: A physician had an Occurrence policy in effect from January 2000 to January 2008, at which time the existing policy was not renewed, or coverage was switched to another insurance carrier. In February of 2009, a patient treated in 2007 filed a claim against the physician. Since the physician had an Occurrence policy in effect in 2007, the insurance carrier that insured him in 2007 would provide coverage for the claim, based on the 2007 coverage.
What is a Claims-Made Policy?
This type of policy provides protection for claims that ‘arise and are reported’ while you have a policy in force. You are covered up to the policy limits in effect at the time the claim is reported. Therefore, a physician is only covered if the claim is actually filed while the policy is in force. To be protected for claims that are reported after the policy has been canceled, you must purchase ‘tail coverage‘, (Extended Reporting Period endorsement), or obtain similar protection from a subsequent carrier. A Claims-Made Policy must continue in force to provide protection, or be replaced by tail coverage. When you elect to change claims-made carriers, ‘Prior Acts Coverage’ must be obtained to cover your exposure from your first day of claims made coverage.
For example: A physician had a claims-made policy from January 2000 to January 2008, at which time the policy was not renewed, and tail was not purchased. In February 2009, a patient treated in 2007 files a claim against the physician. The physician would have no protection against this claim, because the claim was not reported during the policy period. However, there would be coverage for this claim if tail coverage was purchased; if you became eligbile for free tail coverage; or if you switched insurance carriers and the new carrier provided ‘prior-acts or nose coverage’.
Because there is often a significant lag time between when a treatment was administered and the filing of a malpractice claim, Claims made premiums for the first few years are relatively low when compared to the rates for Occurrence policies. However, Claims made premiums increase rapidly on an annual basis, until they level off in year 8. The premiums for Claims made coverage are calculated as a percentage of the Occurrence rates that are in effect at the time.
- Claims-made Coverage Year% of Occurrence premium
- 1 31% of Occurrence premium
- 2 64% of Occurrence premium
- 3 85% of Occurrence premium
- 4 94% of Occurrence premium
- 5 99% of Occurrence premium
- 6 102% of Occurrence premium
- 7 104% of Occurrence premium
- 8 105% of Occurrence premium
Please note that the above premium information is for MLMIC. PRI and other NY standard market carriers also offer Claims-made & Occurrence policies, however, the percentages mentioned above may differ among carriers.
For more information, and a free consultation on your medical malpractice coverage options, please call PriMed Consulting. PriMed Consulting is an independent medical professional liability agency serving NY & NJ.
Phone: 800.528.3758. Email: firstname.lastname@example.org. www.primedconsulting.com
802 West Park Avenue, Bldg. 3, Suite 302, Ocean, NJ 07712