There are two forms of medical professional liability coverage available to physicians, surgeons and dentists: claims made and occurrence. When these two types of policies are kept in continual force, the coverage they afford is basically identical. However, their principal differences lie in the protection they provide after they are cancelled and their pricing structure.
Both types of coverage have primary policy limits of liability available in amounts up to $1.3 million/$3.9 million (each person/annual aggregate) for physicians and surgeons, and up to $2 million/$6 million for dentists.
Occurrence
The occurrence form of coverage protects a policyholder for alleged acts of malpractice that occur while the policy is in force, no matter when a claim is reported to the company.
By way of example, let’s consider a physician who had an occurrence policy in continuous force from July 2005 until July 2015, at which time the physician moved out of state and cancelled the policy. In 2017, a claim is brought against the physician for treatment provided in 2008. Although the claim is brought two years after the policy was cancelled, the physician would be covered for the claim, because in 2008 the occurrence policy had been in force.
Claims Made
The claims made form of coverage protects a policyholder for alleged acts of malpractice, which both occur and are reported to the policyholder’s insurance company during the time the policy is in continuous force. For this example, let’s consider a physician who had a claims made policy in force from July 2005 until July 2015. The policy was cancelled on July 1, 2015. In 2017, a patient brings a claim against the physician for treatment provided in 2008. In this instance, even though the incident occurred during the time the claims made policy had been in force, because the claim was brought two years after the policy’s cancellation, the physician would not be covered for this.
It is important to understand the difference between an occurrence and claims made policy when deciding on medical professional liability coverage. MLMIC-insured healthcare practitioners who opt to purchase a claims made policy will also need to be familiar with Tail and Nose Coverage.
Extended Reporting Endorsement (Tail) Coverage
To be protected indefinitely for claims reported any time after a policy is cancelled, it is strongly advised to obtain Extended Reporting Endorsement (Tail) Coverage, which indefinitely extends the time during which claims may be reported to MLMIC. The Tail covers policyholders for claims arising from treatment rendered between the date the claims made coverage began (the retroactive date) and its cancellation (or non-renewal) date, but which are reported after the policy has been canceled. The Tail provides a separate limit of liability identical to that of the terminated claims made policy.
Tail is available at no charge if coverage is terminated because a policyholder becomes permanently disabled and is unable to continue to practice medicine due to this disability or retires permanently and totally from the practice of medicine and is no longer providing Professional Services to any patient provided certain criteria is met.
Prior Acts (Nose) Coverage
Rather than having to buy the Tail from their previous insurer, qualified policyholders who wish to transfer, uninterrupted, their claims made coverage from another New York State licensed insurer to MLMIC may instead obtain Prior Acts (Nose) Coverage. Like Tail coverage, Nose coverage provides protection for claims reported after the cancellation of a policyholder’s prior claims made policy. However, unlike Tail coverage, which can be expensive to purchase, Nose coverage requires no initial expenditure and may be obtained through the new insurer. A policyholder who transfers claims made coverage to MLMIC will simply begin paying premiums for the new policy at the claims made rate commensurate with the length of time the former policy had been in effect. Please note, it is extremely important for policyholders to report any incident(s) or event(s) that may or will result in a claim against them to their prior insurance carrier before obtaining Prior Acts Coverage.
For example, if Dr. Smith had claims made coverage with company “X” for three continuous years and wished to transfer his coverage to MLMIC, the new policy would begin at MLMIC’s fourth year claims made rate, which reflects the years of risk MLMIC needs to assume. In turn, MLMIC assumes responsibility for any covered claims based on treatment rendered by Dr. Smith during the three years with company “X,” but which are reported while insured by MLMIC, subject to the terms and conditions of MLMIC’s policy.
If you are a MLMIC insured and have a question about your coverage, you may submit a question here.
If you are not already a MLMIC insured and would like to learn more about our coverage options, you may request a quote here.
This document is for general purposes only and should not be construed as medical or legal advice. This document is not comprehensive and does not cover all possible factual circumstances. Because the facts applicable to your situation may vary, or the laws applicable in your jurisdiction may differ, please contact your attorney or other professional advisors for any questions related to legal, medical or professional obligations, the applicable state or federal laws or other professional questions.
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