Worried about how the malpractice market in California might affect your livelihood as a family physician? Here are some basics to get you thinking about malpractice insurance so that you can sleep easier at night.
The vast majority of policies written in California are written on a “claims-made” basis. This means that you are only covered for malpractice incidents that take place during the period that your policy is in force. This is a less expensive option at the outset, since premiums typically grow in steps over four to six years, as your list of patients (and possible lawsuits) grows. Some companies offer policy discounts for attending risk management CME courses.
The other important aspect of claims-made malpractice policies is that your coverage ends when you stop paying your premiums. When you terminate a claims-made policy, the coverage for all care given during the time of that policy ends. For example, if you work as an employed physician from 2002 to 2005, but then leave that practice, you will not have malpractice coverage for that time period unless you or your employer purchase “prior acts” coverage either from the former insurer (tail coverage) or your new insurer (nose coverage). Tail coverage rates are a factor of the last year’s annual premium, generally around 175 to 200 percent and can be a significant expense. All employment agreements should spell out who is responsible for purchasing tail coverage, preferably the employer.
I need to buy malpractice insurance. What should I look for in a company and coverage?
Malpractice insurance is supposed to protect you from the legal and financial risks inherent in the practice of medicine. The two most important qualities in an insurance company are that it be financially sound and that the company be responsive to the needs and concerns of the insured. A.M. Best (www.ambest.com) or Weiss Ratings (www.weissratings.com) can provide you with information about malpractice company ratings. You want to work with a company rated “A” or better.
Here are some of the questions to ask when evaluating malpractice carriers and their policies:
What are the available policy limits, and how much does coverage for someone in my specialty cost?
Are there premium discounts for good claims experience and/or attendance at risk management seminars?
What types of coverage are available, such as peer review or Medical Board defense?
How is defense counsel assigned to a malpractice case? Do I have any say in the process?
What role would I play in determining whether to accept any settlement offer made in my case?
What are the company's routine policy exclusions?
How many are insured with your company in California and nationwide? What is the breakdown by specialty? How long has the company been in existence?
Where should I go to buy malpractice insurance?
CAFP recommends California-based, physician-owned malpractice companies to its members. These include:
Doctor’s Insurance Company (800) 421-2368 www.thedoctors.com
Medical Insurance Exchange of California (MIEC) (800) 227-4527 www.miec.com
NORCAL Mutual Insurance Company (800) 652-1051 www.norcalmutual.com
An experienced insurance broker may also be a good way to shop for your coverage. Contact your local medical society for suggested brokers in your community.
How important is tail coverage? What should I know about it?
It is very important that you maintain continuous malpractice coverage throughout your career in family medicine. California has a claims-made insurance market. You can be sued, but not be covered for your defense if you receive notice of a lawsuit for something that happened while you were insured, but have already terminated your policy. Tail insurance is supplemental coverage to a claims-made policy for incidents that happened under an old malpractice policy.
When switching insurance companies, be sure to obtain tail coverage from your old company or nose coverage (for prior acts) from the new company. Tail coverage can either last for a certain amount of time or be unlimited. You may need to have been with the insurance company for a certain amount of time before you can purchase it. Tail insurance usually costs between 175 and 200 percent of your last annual premium and is typically only available for a short period of time after a policy expires, generally 60 to 90 days.
Many companies have provisions for “forgiving the tail” in situations of death, permanent disability, or retirement. Be sure to investigate these provisions carefully for vesting requirements, age limits, etc.
Barbara Hensleigh, Esq. practices law in Los Angeles, California, focusing on physician representation in litigation and employment-related issues.