Colorado Professionals: Malpractice Insurance Needed?

In Colorado, physicians and real estate professionals are required to carry professional liability insurance, also known as malpractice insurance. This insurance provides coverage against malpractice lawsuits and claims, protecting personal assets and professional reputations. The Colorado General Assembly enacted a law in 1988 mandating that all licensed physicians in the state maintain malpractice insurance with a minimum coverage of $1 million per incident and a $3 million aggregate limit. Additionally, Colorado lawyers in private practice are not required to carry legal malpractice insurance but must disclose their coverage status annually to the Colorado Supreme Court Attorney Registration Office.

Colorado malpractice insurance requirements for physicians

In 1988, the Colorado General Assembly enacted a law requiring all Colorado licensed physicians and all applicants for Colorado medical licensure to maintain a certain amount of malpractice insurance coverage. From January 1, 1990, onwards, Colorado-licensed physicians must maintain commercial professional liability insurance coverage with an insurance company authorized to operate in Colorado.

Effective July 1, 2010, the law requires a minimum indemnity amount of $1,000,000 per incident and $3,000,000 annual aggregate per year or an acceptable alternative as set forth in Board Rule 1.14. This is in line with the most common limits of liability in Colorado.

If you have malpractice insurance coverage valid in Colorado when you submit your application, you must instruct your insurance carrier or Colorado postgraduate training program to submit an original statement directly to the Board office. This statement must indicate the policy number, dates of coverage, amounts of coverage, and (for insurance companies outside of Colorado) a statement affirming that the coverage is effective while you practice in Colorado.

If you do not have the required malpractice coverage when you apply and you meet one of the exemption categories set forth in Rule 1.14, you must provide a signed statement to the Board claiming one of the specific exemptions. For example, "I currently reside outside of Colorado and claim exemption 'd' set forth in the attached rule. I understand that before I engage in any medical practice in Colorado, I must obtain the required insurance or an acceptable equivalent."

If you do not have the required insurance coverage and you do not meet any exemption categories, you must obtain insurance coverage before your application will be considered complete and submitted for review.

Malpractice insurance for real estate professionals

In Colorado, real estate professionals are required to carry professional liability insurance, also known as errors and omissions (E&O) insurance. This insurance helps protect real estate agents, brokers, and property managers from professional risks and client lawsuits related to the quality of their work. It covers accusations of negligence, work mistakes, inaccurate advice, missed deadlines, and undelivered services.

Real estate professionals face potential exposures due to increasing client expectations and the growing prevalence of lawsuits. Professional liability insurance can provide tailored coverage to mitigate these risks and protect firms from financial losses. It is designed to offer protection for negligence, errors, and omissions in the performance of professional services.

In Colorado, the average premium for professional liability insurance is $59 per month, but costs can vary depending on factors such as the size and location of the business, coverage limits, and the number of employees. Real estate professionals should ensure they have adequate coverage to protect themselves and their businesses from potential claims.

While malpractice insurance is not mandatory for all regulated professionals in Colorado, it is required for specific industries, including real estate and healthcare. Real estate professionals should consult with insurance providers to understand their specific requirements and ensure they have the necessary coverage to mitigate risks and comply with state regulations.

Legal malpractice insurance for lawyers

In Colorado, lawyers are not required by law to carry legal malpractice insurance. However, all private practice attorneys must disclose whether they carry this type of insurance coverage. While malpractice insurance is not mandatory for lawyers in Colorado, it is highly recommended.

Most lawyers will face malpractice claims at some point in their careers. According to the American Bar Association, four out of five lawyers will have at least one malpractice claim during their careers. The severity of insurance claims is also increasing, with legal malpractice insurers seeing an increase in claim severity in 2022, including larger claims with costs exceeding $50 million.

Not having legal malpractice insurance may save money in the short term, but it can put the financial future of a law firm at risk. A malpractice claim could easily deplete a law firm's fiscal resources, even if the firm successfully defends against the claim.

Lawyers in Colorado should carefully consider the benefits of legal malpractice insurance and make an informed decision based on their specific circumstances.

Choosing a Legal Malpractice Insurance Provider

When selecting a legal malpractice insurance provider, it is important to choose one that is authorized to provide coverage against claims in your state or province. In the United States, the American Bar Association (ABA) maintains a Professional Liability Insurance Directory that lists insurers handling malpractice claims in each state. State, local, and practice area bar associations may also have lists or recommendations for legal malpractice insurance providers.

Applying for Legal Malpractice Insurance

When applying for legal malpractice insurance, it is important to be thorough and careful. Many insurers request detailed applications from lawyers, which may become part of the insurance policy contract. Submitting incomplete or inaccurate information could result in higher insurance rates or exclusions from future coverage. It is advisable to investigate insurers thoroughly and only submit applications to your top choices.

Understanding Coverage

The specifics of coverage are crucial when purchasing legal malpractice insurance. While exact coverage varies depending on the policy, it generally protects against claims related to missed deadlines, negligence in legal advice, conflicts of interest, failure to communicate, and breach of duty. However, standard professional liability insurance may not cover certain areas, such as prior acts coverage, tail coverage, non-firm legal activities, business activities, and cybersecurity.

Knowing Coverage Start Date

It is essential to be clear about the start date of legal malpractice insurance coverage. Attorneys should avoid undertaking legal work before the policy start date, as this could leave them exposed to risk if a malpractice claim arises.

Cost of Legal Malpractice Insurance

The cost of legal malpractice insurance varies depending on several factors, including the law firm's geographic location, the number of attorneys in the firm, the practice area, and the claims history. Insurers consider the frequency and severity of claims when calculating premiums. It is important for lawyers to understand these factors and consult with insurance brokers to make informed decisions about their coverage.

Malpractice insurance for higher-risk specialties

In Colorado, medical professionals are required by law to carry a minimum of $1 million of medical malpractice insurance per incident and an aggregate limit of $3 million annually. This coverage is necessary to protect personal assets and one's professional reputation, as well as to offer financial protection in the event of a malpractice lawsuit. While this is the minimum requirement, those practicing higher-risk specialties may need to obtain additional coverage.

Higher-risk specialties are generally more procedure-oriented and include emergency medicine, general surgery, neurosurgery, obstetrics/gynaecology, orthopedic surgery, and radiology. These specialties tend to have more malpractice claims overall and a higher percentage of claims that result in indemnity payouts. The average indemnity payment for high-liability risk specialties was $315,314 compared to $267,146 for low-liability risk specialties.

When it comes to malpractice insurance for higher-risk specialties, it is important to consider the different types of policies available. Claims-made policies only cover incidents that occur and are reported while the policy is in effect. On the other hand, occurrence policies provide lifetime coverage for incidents that occurred during the policy period, regardless of when the claim is filed. Claims-made policies are typically cheaper initially but may not provide sufficient coverage for higher-risk specialties.

It is also crucial to understand the limits of coverage offered by the policy. Most policies offer coverage limits ranging from $100,000 to $3 million. Physicians in higher-risk specialties should ensure their policy limits are commensurate with the risks associated with their specialty. Additionally, some policies have consent-to-settle clauses, which require the insured's consent before settling a claim. This can be advantageous as any settlement must be reported and could adversely affect the physician's insurance status and professional standing.

When choosing a carrier, it is essential to consider the company's fiscal soundness, claims handling, and sensitivity to policyholders. Physician-owned insurance companies are often preferred as they are more sympathetic to physicians and focused on serving their needs.

In summary, malpractice insurance for higher-risk specialties in Colorado requires careful consideration of policy types, coverage limits, and insurance carriers. By understanding the risks associated with their specialty, physicians can make informed decisions to protect themselves and their practice.

Malpractice insurance exemptions

In 1988, the Colorado General Assembly passed a law requiring all licensed physicians and medical license applicants in Colorado to have a certain amount of malpractice insurance coverage. This law also applies to real estate professionals. However, there are some exemptions to this rule.

Firstly, if you already have malpractice insurance coverage that is valid in Colorado at the time of your application, you can simply instruct your insurance carrier to submit a statement to the Colorado Medical Board office, indicating the policy number, dates of coverage, and amounts of coverage. If your insurance carrier is based outside of Colorado, they must also provide a statement confirming that the coverage applies while you are practising in Colorado.

If you do not have the required malpractice coverage, you must obtain insurance before your application will be considered complete and submitted for review. However, if you meet one of the exemption categories set forth in Rule 1.14, you must provide a signed statement to the Board, claiming one of the specific exemptions. For example, if you reside outside of Colorado, you can claim exemption "d", but you must understand that before engaging in any medical practice in Colorado, you will need to obtain the required insurance.

In addition, there are some states that do not require medical malpractice insurance or have minimum carrying requirements. These include Alabama, Alaska, Arizona, Arkansas, California, Delaware, Florida, Georgia, Hawaii, Idaho, Illinois, Iowa, Kentucky, Maine, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nevada, New Hampshire, North Carolina, North Dakota, Ohio, Oklahoma, Oregon, South Carolina, South Dakota, Tennessee, Texas, Utah, Vermont, Virginia, Washington, and West Virginia. However, it is important to note that even in these states, physicians may still be required to obtain malpractice insurance in certain situations, such as when working with visiting privileges at a hospital or participating in a healthcare insurance plan.

Frequently asked questions