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Understanding Malpractice Insurance

(Reprinted from OAPA Progress Notes 2009)

Who is your malpractice insurance carrier?  What dollar limits do you have?  Do you have a stand alone policy, are you covered by a blanket policy or is your insurance through a rider on your physician’s policy?  Do you have a claims-made or occurrence policy?  And finally, if your policy is claims-made, who pays for tail coverage if you decide to leave?  If you don’t know the answers to these questions, you should, because the wrong situation could become a financial burden to you down the road.

To help you understand malpractice insurance, let’s identify the two major types of policies.  A “claims-made” policy covers claims that are made while the policy is in effect and the policy must be continued indefinitely to assure coverage for claims filed in the future for actions that occurred in the past.  If the policy is cancelled, “tail coverage” must be purchased to insure incidents which occurred while the policy was in force, but reported after the policy was cancelled.  Once the policy is “tailed out”, the insured only has a single set of limits for the entire policy period.

 “Claims-made” policies have become the norm and are what you’d have if you are covered by a rider on your physician’s PLICO policy.  Unfortunately, several PAs over the past few years, after leaving the practice, have been asked or required to pay for “tail coverage” out of their own pockets.  Understand that such coverage costs several thousand dollars.

On the other hand, an “occurrence” policy covers alleged acts of negligence occurring while the policy was in effect.  It does not matter if the coverage is in effect at the time the claim is made.  Occurrence policies continue providing coverage for the insured period, even after the policy is cancelled.  Tail coverage is never required for occurrence policies and a set of limits is provided for every single year the policy is in force.

Until recently, an occurrence policy for a PA working with a private physician was impossible to find in Oklahoma.  Now there are options including: 1) your own policy, thus allowing you to work multiple jobs without having to purchase separate riders, 2) occurrence or a claims-made policy, 3) consent to settle, and 4) limits up to $1 million per incident/$6 million aggregate.

 The OAPA will not endorse any specific malpractice carrier.  However, feel free to contact the OAPA with questions regarding malpractice insurance or for information on how to access insurance options.