Jane Dotson
Doctors require a variety of insurance policies to protect their practices, assets, and employees. Medical malpractice insurance, also known as professional liability insurance, is one of the most crucial and expensive types of insurance for doctors. It protects physicians from financial losses in the event of a lawsuit or settlement due to medical malpractice claims. Additionally, doctors may require business insurance, such as a business owner's policy (BOP) that includes commercial property insurance and general liability coverage. This can protect against risks such as patient injuries, property damage, and employee injuries. Other types of insurance to consider include cyber liability insurance, disability insurance, and various other specialty policies to ensure comprehensive protection for the practice and its employees.
| Characteristics | Values |
|---|---|
| Medical malpractice insurance | Claims-made malpractice insurance, occurrence-based malpractice insurance, professional liability insurance |
| Business interruption insurance | Covers lost profits, payroll, outstanding bills, taxes, and other operating expenses |
| Workers' compensation insurance | Covers medical bills and lost wages if an employee is injured on the job or becomes ill from job-related exposure |
| Cyber liability insurance | Helps notify patients of compromised data, provides credit monitoring, and helps pay ransom demands |
| Disability insurance | Provides income insurance for physicians who can no longer work in their specialty but choose to work in another one |
| Life insurance | Eliminates the financial consequences of the insured's death |
| Business overhead expense (BOE) policy | Provides reimbursement for the expenses of operating a practice if one of the practice owners is disabled and cannot work |
| Commercial property insurance | Protects physical assets against damage or loss caused by covered events, including the building, equipment, furniture, and supplies |
| General liability insurance | Covers basic third-party risks, such as a patient who trips and suffers an injury in a clinic, damage to property, and damage to rented property |
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What You'll Learn
Claims-made malpractice insurance
Claims-made insurance protects you from malpractice claims only if the company that insured you at the time of the alleged occurrence is the same company at the time the claim is filed in court. For example, if Company A was the malpractice insurer on the date of an alleged malpractice incident and is still your insurer when the claim is filed, you are covered for the claim. However, if you have a claims-made policy and it lapses because you retire or your practice closes, you can opt to purchase "tail coverage" to protect you from ongoing risk. Tail coverage will provide malpractice protection for acts committed when covered by a claims-made policy, even if you are now covered by a different insurance carrier. The cost of tail coverage is a one-time assessment that can be as much as 1.5 to 2 times a typical annual malpractice insurance premium.
In addition to malpractice insurance, doctors may also need other types of insurance, such as life insurance, disability insurance, and cyber liability insurance. Life insurance aims to eliminate the financial consequences of death, while disability insurance can replace some of the lost income if a doctor becomes unable to practice due to an injury or illness. Cyber liability insurance is becoming increasingly necessary as practices move from paper to digital documentation. It can help notify patients of compromised data, provide them with credit monitoring, and help pay ransom demands if their data is hacked or infected with ransomware.
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Occurrence-based malpractice insurance
The policy periods for occurrence-based malpractice insurance typically range from six months to one year. During this time, healthcare providers are protected from claims of negligence, errors, or omissions that result in patient injury or harm. It is important to note that occurrence-based policies have two types of coverage limits: per-occurrence limits and aggregate limits. The per-occurrence limit is the maximum sum an insurer will pay for a single claim, while the aggregate limit is the total amount payable by the insurance company for all claims made within a specific time frame.
While occurrence-based malpractice insurance offers comprehensive protection, it may not be necessary for all healthcare providers. Some doctors may find that they are already covered by their facility's insurance policy, which often includes occurrence-based malpractice insurance. Additionally, occurrence-based policies tend to have higher initial costs compared to claims-made policies, making them less accessible for new healthcare providers or those seeking to minimise upfront costs.
In conclusion, occurrence-based malpractice insurance is a valuable option for doctors seeking comprehensive protection against potential lawsuits arising from patient care. Its long-term coverage ensures peace of mind, even for incidents that occur years after the policy period. However, the higher costs and limited availability of occurrence-based policies may deter some healthcare providers, who may opt for the more flexible and affordable claims-made policies instead.
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Business interruption insurance
There are several types of business interruption insurance available, including:
- Business income coverage: This assists in replacing lost income and paying ongoing expenses if a business is forced to close temporarily due to a covered loss.
- Extra expense coverage: This assists in covering the additional costs a company may incur to minimize or avoid a shutdown, such as renting temporary office space or paying staff overtime.
- Contingent business interruption coverage: This protects a company from losses caused by a disruption in the operations of a supplier or business partner.
- Civil authority coverage: This protects a business from damages caused by government-mandated closures or limitations, such as mandatory evacuation orders or curfews.
When considering business interruption insurance, it is important to review the specific risks your business might face and the potential financial impact of having to pause operations. It is also crucial to carefully read the fine print of any policy to understand what is and isn't covered, as some policies do not cover certain natural disasters or pandemics. Business interruption insurance typically covers a business until it is back on its feet, but the duration can vary depending on the type of interruption and repair time needed.
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Cyber liability insurance
As medical practices move from paper documentation to digital documentation for patients, cyber liability insurance is becoming increasingly necessary. This type of insurance protects medical practices and other healthcare businesses in the event of a cybersecurity breach or online attack, such as hacking or ransomware. It covers losses and damages resulting from patient data being stolen, exposed, held for ransom, or improperly shared. This includes deliberate actions, such as hacking, as well as accidents, such as the loss of a laptop containing patient information or a coding error that accidentally exposes patient data.
Before purchasing cyber liability insurance, physicians should check what coverage they already have through their malpractice or general business policies, as it may already include some level of cyber coverage.
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Disability insurance
There are several factors that doctors should consider when evaluating disability insurance policies:
- Costs: Disability insurance typically costs 1%-4% of one's annual salary. The cost is influenced by factors such as the statistical risk presented to the insurance company, which takes into account factors like medical specialty and age.
- Definitions of disability: It is important to understand how the insurer defines disability, as this determines when benefits will be paid. The "own occupation" definition is generally preferred, as it protects the insured's specific medical specialty.
- Riders: Riders are additional provisions that can be added to a policy for an extra cost. Common riders include the residual disability rider, which provides partial benefits if the insured returns to work part-time, and the student loan protection rider, which helps pay off student loans in the event of a disability.
- Maximum benefit limits: Different insurers offer varying maximum benefit limits, which refer to the total amount the insurance company will pay out over the duration of the policy.
- Optional provisions: Doctors should consider insurers that offer optional provisions to address specific challenges faced by medical professionals, such as loan payoff provisions and mental and nervous provisions.
When shopping for disability insurance, doctors should consult independent agents or professional insurance advisers who specialize in working with physicians. These agents can help doctors compare policies, understand their specific needs, and tailor the policy provisions accordingly.
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Frequently asked questions
Medical malpractice insurance, also known as professional liability insurance, protects physicians and dentists against the financial burden of losing or settling a lawsuit due to medical malpractice.
There are two main types of medical malpractice insurance policies: claims-made and occurrence-based. Claims-made policies cover claims made and reported within the policy period, whereas occurrence-based policies cover incidents during the policy period, regardless of when the claim is made.
Disability insurance for doctors, also known as physician disability insurance, provides income protection if a doctor becomes unable to work due to an injury or illness. The "true own-specialty" definition allows doctors to collect full benefits if they can no longer work in their medical specialty but can work in another.
Business interruption insurance covers lost profits, payroll, bills, taxes, and other expenses if a doctor's property is damaged and their practice is disrupted. It can also help pay for a temporary location until the property is repaired.
Cyber liability insurance protects against data breaches and cyberattacks, helping to notify patients, provide credit monitoring, and pay ransom demands if necessary. With the increasing digitization of patient data, this type of insurance is becoming more crucial for doctors to safeguard sensitive information.
