Understanding the Basics of Medical Malpractice Insurance

We live in a litigious society where lawsuits claiming health problems or deaths caused by medical negligence remain a real and persistent threat to healthcare providers. Such an environment makes NJ medical malpractice insurance a necessity. Having proper insurance protection allows medical professionals to perform their duties without fear of a career-ending legal catastrophe.

Medical Malpractice Is a type of E&O Insurance

It is not just medical practitioners who are at risk of lawsuits for claims of professional malpractice. Lawyers, accountants, architects, contractors, and others are also potential targets and need protection against liability claims. Liability insurance for professionals is known as errors and omissions (E&O) coverage. However, you’ll find in the medical profession, E&O coverage is commonly known as medical malpractice insurance. 

Who Needs Medical Malpractice Coverage?

Specifically, medical malpractice insurance is a safeguard for physicians and healthcare professionals against lawsuits from their patients who claim negligent acts by their medical professional, leading to injuries, health complications, or death. Those who provide health-related services, such as surgeons, physicians, nurses, nurse practitioners, physician assistants, dentists, opticians, physical therapists, and others, need medical malpractice insurance. On average, a physician can expect a malpractice lawsuit every seven years.

NJ medical malpractice insurance will help to cover expenses for settlement costs, attorneys’ fees, court and arbitration costs, medical injuries, punitive and compensatory damage assessments. 

Medical Malpractice Policies Have Exclusions

Exclusions to coverage include claims involving criminal acts, incidents of sexual misconduct, unacceptable changes to or unauthorized release of medical records, and acts where the insured was under the influence of alcohol or drugs. Any business owned by the healthcare practitioner that is not named as an insured on the policy, injuries relating to the use of autos in the business, and for some medical procedures, such as anesthesia are also standard policy exclusions.

Types of Medical Malpractice Insurance

There are two types of policies to consider for NJ medical malpractice insurance: “claims-made” and “occurrence.” The most common is the claims-made policy. It offers protection for claims made against an insured medical professional during the policy period. A standard claims-made policy will only cover claims made during the policy period. 

Most claims-made policies are priced with a lower premium at first to keep initial costs down. They usually increase over a period ranging from four to seven years, at which point they mature. After the maturation period, premiums remain generally stable except for across-the-board rate increases by insurance carriers or a change in the insured’s claims experience.

A separate policy for an Extended Reporting Period is known as tail coverage. It extends protection against claims for a predetermined period of years after the policy expiration. Claims-made policies usually set a retroactive date and limit coverage to incidents that occur either on or after the retroactive date. Purchasing tail coverage is advisable for insureds who retire or move to a new employer, causing their previous “claims-made” policy to lapse upon their departure.

By comparison, an “occurrence” policy provides coverage for any claims against the insured that occurred during the period when the policy was in force, even if the claimant files beyond the policy’s expiration date. The initial premium for an occurrence policy will cost more than a claims-made policy because purchasing a separate tail coverage policy is unnecessary.

What to Consider

There are choices for policy limits, which can vary widely and are crucial to get right. Most medical malpractice policies have an aggregate limit for an annual period and an individual limit. The individual limitation can apply to each claim or each event depending on the policy language. An experienced insurance adviser can help choose the best limit based on conditions such as specialty, location, experience, and more. Lawsuits are more prevalent in some states and regions than in others. Some specialties, such as OB/GYN, have higher rates of malpractice suits. 

Aggressive legal defense of a practitioner’s reputation and credibility makes having NJ medical malpractice insurance in place vital. Legal shield against attempts of license suspensions and revocations is critical. Robust legal defense afforded by malpractice insurance can avoid a public record of an adverse malpractice history, leading to lost employment opportunities and loss of potential new patients.

Cover Your Assets  

It is a common perk for medical practices to purchase medical malpractice for the healthcare professionals they hire. But having a personal policy that covers your professional liability is highly recommended. The best advice is to annually request a certificate of insurance that confirms you are on the policy as a “named insured.” Your personal medical malpractice policy can move with you when you change jobs. Your personal, professional liability coverage adds an extra security layer against claims that can threaten your license, assets, and career. 

At the Dickstein Associates Agency, our team has decades of experience writing specialty insurance for medical offices, including medical malpractice insurance. Our professionals are ready to use their expertise to assess your needs and help you select the best coverage. As an independent agency, we work to offer you comprehensive coverage with competitive rates from the insurance carrier best suited for your unique needs. 

About Dickstein Associates Agency

Dickstein Associates Agency has distinguished itself as a leading provider of personal and business insurance in the tri-state area for over 55 years. We pride ourselves on being advocates for our clients and providing them with quality and affordable coverages. As an independent insurance agency, we partner with various carriers, allowing for flexible and unbiased coverage for each client’s unique circumstances. For more information on how you can leverage all of your insurance to work best for you, and how we can secure the best insurance in the marketplace based on your specific needs, contact us today at (800) 862-6662.