Malpractice Insurance Selection
When choosing malpractice insurance, it is important to remember that not all plans and companies are the same. Make sure you understand the basics of malpractice insurance and consider the following when comparing policies:
Limit of liability - The limit of liability you choose is used to compensate for damage, loss or injury suffered by the patient (plaintiff). Payments to plaintiffs due to court judgments or settlements are often referred to as indemnity payments because the malpractice insurer compensates you against these judgments or settlements.
Legal Defense - Malpractice insurance pays for your legal defense whether the allegations against you are true or not. This can easily cost tens or even hundreds of thousands of dollars; it is a very important part of your coverage. Legal defense payments can be made in two ways. One option is to pay from your policy limits of liability. The alternative is to select a policy that pays your legal costs in addition to your policy limit of liability. This option may be referred to as "defense outside limits." The second option is the best scenario for many policyholders because it may prevent defense costs from eroding your limit and leaving you exposed to amounts owed over the limit. Additionally, the second option will ensure that there is money available for any settlement or judgment.
Understand Consent to Settle
Consent to Settle – A Consent to Settle feature in the policy is very valuable because it ensures no case will ever be settled without your permission. Look for “True” or “Pure” Consent to Settle, which means the policyholder (you) has the option to settle your case or take it to court. You've worked hard to build your reputation, and you have the right to defend it to the fullest.
Hammer or Modified Hammer – When Consent to Settle is listed as a feature a plan may have a hammer or modified hammer clause. This means if your insurance company recommends settling a case and it is determined you withhold your consent, you will have to pay out of your own pocket any judgment in excess of the proposed settlement amount, even if your policy limits support the settlement offer amount. This may end up costing you thousands of dollars.
Arbitration Clause – If the insurance company thinks you are being unreasonable by withholding consent to settle, it can send the case to arbitration. A third party will review the claim and decide if you are being reasonable in withholding consent. If the arbitrator determines you are being unreasonable, the insurance company can settle the case without your consent.
Experience – The more years of experience a malpractice insurance company has, the wider variety of cases and situations they've seen. You'll want to have that expertise behind you should you ever face a claim. Consider the number of years each company has specializing in healthcare malpractice.
A Sound Business – It's important you feel confident about your malpractice insurance company. Be sure to check their financial strength rating. It's easy to do at industry analyst web sites, such as A.M. Best at www.ambest.com.
Admitted vs. Non-Admitted Carrier – Pay close attention to whether the company is “admitted” or “non-admitted.” An admitted carrier must meet certain statutory criteria before a state insurance department will admit them to do business in that state. Further, an admitted carrier is subject to ongoing state regulation, oversight, audit and examination. Admitted carriers are required to participate in State Guaranty Funds, which assists with payment of claims if the admitted carrier becomes financially impaired. A non-admitted carrier's rates and forms are not subject to state insurance department oversight and do not participate in State Guaranty Funds.
Outstanding Client Service – Know the difference between purchasing malpractice insurance through a broker versus direct from the insurance company. Purchasing coverage from the insurer means you deal directly with the issuer of your coverage.
Commitment to Naturopathic Medicine - See if the insurers you are considering are involved in the support and advancement of naturopathic medicine. If so, they probably understand your unique needs better than a company that chooses not to get involved.
Malpractice insurance for NDs has the most value in licensed states. An insurance company can only insure against a scope of practice. In unlicensed states there is not a scope of practice therefore there is nothing for an insurer to insure against. If working in an unlicensed state you may find it beneficial to hold business insurance, acupuncture malpractice insurance, or massage therapy liability insurance. Please consult your legal advisor for more details.
Special thanks to Emerson Ecologics.