Questions on Malpractice InsuranceA nurse practitioner (NP) writes: Show "My collaborative MD believes that I should not need more liability insurance than his rider. My FNP liability insurance costs $1200 -- more than either PNP or ANP. My colleague in the same practice has separate credentials for ANP and PNP but as most of our patients are adult she only carries her insurance for adult -- $800. What do you think about the actual liability needs?" This question exemplifies the dilemmas NPs are facing when attempting to cover themselves for professional liability. Inherent in this NP's questions are the following questions: Do I need my own policy, if I am employed and my employer covers me?
This article addresses those questions. The questions that need to be answered to answer this question are: Will my employer's coverage be enough?
Will my employer's coverage be enough? It is difficult to get reliable data to use to predict what settlements, judgments, and defense costs might run. However, according to 2 sources, defense costs are running between $20,000 and $40,000, depending upon whether the claim resulted in a payment.[1,2] Data from the insurance industry places the average payout for serious injuries as now exceeding $1.5 million.[3] Another source puts the average payout at just under $200,000.[2] A third source puts the average at $320,000.[1] Average payouts mean little if the verdict or settlement against you is for an amount that exceeds the limits of your policy. Damage awards give clinicians clues that at least $1 million in malpractice insurance is necessary. Here are some recent cases against NPs. All involve diagnostic errors, which is the most common reason for malpractice lawsuits against NPs and physicians in office practice. Case 1: Case 2: Case 3: Successful plaintiffs can enforce judgments or settlements by garnishing wages, putting a lien on the defendant's house, and exercising a levy on the defendant's bank accounts. There are various ways to try to shelter one's income from successful plaintiffs, but they have their own risks and costs. The ethics of "going bare" (not having insurance) or not having enough insurance weigh heavily on many clinicians. If you make a mistake and someone is injured, are you going to feel ethically responsible for compensating the patient? If you try to get out of this obligation, is it going to weigh heavily on your conscience? If you elect not to purchase insurance or go with a policy with low limits, are you going to worry constantly about having the cash to pay off an injured patient? Will you save money in an account just for that purpose? Are you worried that your employer's policy won't cover you? Or are you unable to get information on your employer's policy? If the answer to any of these questions is "yes," it is probably worth the cost of your own policy to maintain your integrity and have peace of mind. Every NP is going to encounter different risks and different premiums. Do a risk-benefit analysis. Get as much coverage as you can afford, but no less than $1 million per occurrence. If an employer's policy has limits below $1 million, strongly consider purchasing your own policy for additional coverage. Is my employer's coverage dependable? An insurance purchaser needs to feel secure that the insurance company is financially secure enough to pay out if necessary. To research the financial stability of an insurance company, find out which company underwrites the policy. This information should be provided on the insurer's Web site. Go to A.M. Best's Web site, or another of the several companies that rate the financial stability of insurance companies, to find the insurer's financial stability rating. You'll want to see a rating of A- or higher. Do I perform any services that aren't covered by my employer's policy? Each insurer has different terms and conditions. If an NP relies on an employer's policy, the NP will need to be sure he or she can meet the conditions of the policy. Read the policy to determine whether the procedures and services you provide are covered. If I leave my employer, will my employer's policy cover me for an incident that occurred while I was still employed? Most insurance policies for physician practices are "claims made." With a claims made policy, an NP must purchase a "tail" -- coverage extension -- when the NP leaves the employer. The prices for tails vary greatly and can, for a pediatric NP (PNP), be in excess of $5000. Some employers agree, as part of an employment agreement, to pay for the NP's tail policy. If the employer will not pay for the tail, the NP is going to have to do it when he or she leaves the employer, or the NP will be "bare." Additional important advantages of having one's own policy are:
The disadvantages of having one's own policy are:
Before electing to go solely with an employer's policy, ask the following questions of the employer:
Purchase your own policy if:
If working for a government agency, the considerations are:
If working for a hospital or large organization, the considerations are:
How much coverage should I purchase? Rates vary, based on the company, length of time in practice, type of certification, state where practicing, and number of hours practicing per week. For an employed adult NP working full time in Maryland, recent rates varied as follows:
Rates may be lower or higher in other states or for other NP specialties. Purchase as much insurance as you can afford, but not less than $1 million per occurrence. Why do policies for some areas of certification cost more than others? Premium rates are determined by actuaries who analyze the risk for each category of clinician. If a policy for a family NP (FNP) costs more than a policy for an adult NP (ANP), that means the company's actuaries determined that it is more likely that the payout for an FNP will be more than for an ANP. One reason why the payout might be higher for an FNP would be the extended statute of limitations when the injured party is a child. Do I need coverage for all of my areas of certification, even if my practice is limited to one area? Maybe. First, if you are an ANP and PNP but practice only with adults, are you committed to never providing services for a child? Second, have you been honest on your insurance application, stating that you are an ANP and PNP but are purchasing only ANP insurance? Third, have you checked with the company to see whether they have any term or condition that would require you to be insured as both ANP and PNP? Insurers may make their own terms and conditions and may deny coverage if their terms and conditions are not met. If I don't sign up for the appropriate type of policy, can the insurer refuse to cover me if I am sued? Yes. If I have 2 policies, will the policy terms allow the insurers to argue about who pays? Some policies state that if there is any other insurance policy that applies to the amounts covered under the policy, the other insurance must pay first. In that case, if an NP is insured through an employer as well as his or her own policy, the NP's insurance may be secondary (ie, would pay only if the other insurance has reached its limits). If an employer's policy had a similar condition, the NP might find him or herself involved in litigation about which insurer must pay first. Read and understand each policy's terms regarding other insurance. Ask insurers for terms that will suit your situation. Who pays most for malpractice insurance?Therefore, doctors in specialties that are considered higher risk pay more for their malpractice insurance. Typically, surgeons, anesthesiologists and OB/GYN physicians are charged higher premiums.
What is claims made vs occurrence?An occurrence policy has lifetime coverage for the incidents that occur during a policy period, regardless of when the claim is reported. A claims-made policy only covers incidents that happen and are reported within the policy's timeframe, unless a “tail” is purchased.
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