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Your Malpractice Policy

Why It's Important and How It Works

Malpractice insurance for Doctors of Chiropractic is vital. It protects you, your practice, your patients and your finances. It's critical that you understand your malpractice coverage, also known as medical malpractice or professional liability insurance, and how it works.

What Does a Malpractice Policy Cover?

Indemnity

One of the main purposes of malpractice insurance is to pay damages suffered by the plaintiff (patient). The amount paid to the plaintiff — a settlement or award — is called an indemnity payment. Payments for indemnity are available up to the limits of liability of your policy.

Legal Defense

Your malpractice insurance company is responsible for providing you with a defense and paying for it. This is a significant part of coverage because defending a chiropractic malpractice claim can easily cost tens, even hundreds of thousands of dollars, even if you've done nothing wrong.

How Much Malpractice Coverage Do I Need?

Malpractice insurance policy limits are referred to with two numbers. For a $1 Million/$3 Million policy, the first number refers to the maximum amount your policy will pay for any one claim. The second number is the maximum amount your policy will pay during each annual policy period. In this example, $3 million.

Determining your level of policy coverage is important. Take into account the following:

  • The amount of money that may be needed by a patient who was inadvertently injured as a result of treatment, as well as sufficient coverage to protect your other patients, your practice and your financial future.
  • Third-party payer contracts generally require you to carry malpractice insurance with certain limits of liability.
  • State statutes may require coverage minimums.
  • An employer may require similar policy limits for everyone in the office.

Lower policy limits can affect the outcome of a case. If there is a desire to settle a case, low limits can make it difficult or impossible to do that. Low policy limits can also expose your personal assets if a judgment exceeds policy limits. Then, you are liable to pay the excess. (You may think personal umbrella insurance can help, but umbrella policies exclude professional liability exposures.)

An NCMIC policy pays unlimited defense costs in addition to jury awards or settlements. So, if you have a $1 million policy limit, you would be covered for up to $1 million per claim in jury awards or settlements, PLUS unlimited defense costs.

What Types of Malpractice Policies are Available?

There are two basic types of malpractice insurance: occurrence and claims-made. Both types of policies have the same coverage and both will provide you with a defense. What differs between the two is how and when the coverage triggers.

Occurrence Malpractice Insurance

This type of policy provides coverage against claims for alleged incidents that occur anytime during the policy period. Even if the policy has expired or been canceled, if the alleged incident occurred while the policy was in force, the coverage is there.

Why is this important? Most claims are filed relatively soon after the treatment or incident in question, but some lawsuits have been filed and successfully litigated for incidents that took place many years earlier. This is particularly relevant when minors are involved or when the alleged injury doesn’t manifest itself until much later.

Claims-made Malpractice Insurance

A claims-made policy, on the other hand, provides coverage for claims that are made against you and reported in writing during the policy period or during an extended reporting period. Incidents that result in a claim must occur on or after the retroactive date of the policy and before the policy terminates.

Claims-made coverage is triggered when:

  1. The alleged injury occurs on or after the policy’s retro date.
  2. A written claim is made and reported during the current policy period or within the term of the policy or any extended reporting period following the current policy period, generally 60 days following termination of the policy.

Malpractice Tail Coverage

Avoid Gaps in Coverage

A gap in coverage can result in a number of ways. If the retroactive date (coverage date) of a claims-made policy changes, a gap in coverage may result. To avoid a gap in coverage when canceling your claims-made policy or switching insurance companies, you need to purchase either tail coverage from your former insurer or prior acts coverage from your prospective insurer. Without this additional coverage, there is no coverage for the entire period of time the previous policy was in place.

Typically, tail coverage must be purchased within a certain period of time following cancellation. It is a one-time purchase, does not expire and cannot be canceled by you or the insurance company that issues it. Generally, tail coverage may not be purchased if the policy was canceled for nonpayment of premium.

NCMIC provides tail coverage at no additional charge after 10 years of continuous coverage and when doctors are retiring or become disabled (certain requirements apply). When switching between companies or coverage types, NCMIC can help you to address coverage issues, identify gaps and suggest solutions for your protection.

Consent-to-settle Feature

One of the most critical features of a malpractice insurance policy is whether it gives you the authority to settle—or not settle—a malpractice claim. All policies name the party who is authorized to give consent to settle, but not all policies are created equal. Many policies available contain consent to settle features limiting your ability to make your own settlement decisions. The ideal consent to settle is one that can be authorized only by the insured (you).

NCMIC offers a true consent-to-settle clause. In the event of a malpractice allegation, NCMIC will not settle a claim without your authorization. So, if you decide you want to pursue the case, you’ll have your day in court. (Consent to settle is not allowed by Maryland.)

Some policies have clauses that limit a doctor’s decision to settle or not. Two variations are: Hammer or Modified Hammer Clauses. Another clause found in some medical professional liability insurance policies that affects the doctor’s consent to settle is the arbitration clause. NCMIC’s policy does not include a hammer, modified hammer or arbitration clause.

Additional Malpractice Coverage

It’s important that your malpractice insurance policy offers additional coverage options so you can customize your protection as needed. If allowed by your state, NCMIC’s policy offers the following:

  • $60,000 Audit and Legal Defense Endorsement is available at no additional charge, and includes defense coverage for State Disciplinary Proceedings, Civil Sexual Misconduct Allegations, Wrongful Billing and Related Proceedings for federal/state funded programs, including private health insurance company billing audits, HIPAA and Privacy Related Proceedings, and Quality Improvement Organization (QIO) Review.
  • Professional Entity/Corporation Coverage with shared limits of liability at no additional charge.1 If your practice is a corporation, LLC or partnership, you’ll want to make sure it’s protected from liability due the negligent acts of employees. Separate limits of liability are available for an extra charge.
  • Peer Review and Utilization Review. This is coverage for rendering an opinion on the adequacy, necessity or reasonableness of care furnished by another practitioner, based on a review of the patient’s records without a physical examination. Coverage is also provided for review or evaluation of professional services rendered by a professional practitioner for the purposes of determining competency. Provides for payment of the reasonable legal fees and expenses of a lawyer and damages within limits of liability of $25,000 per incident and $50,000 per policy period. Does not have to relate to a malpractice action.
  • Dual License Coverage. Doctors of Chiropractic who hold an additional license as a Naturopathic Doctor or Acupuncturist can be covered under the same policy for both licenses for a nominal additional premium. No additional premium is charged for Chiropractors who maintain a second license as a Physical Therapist 2 or Massage Therapist.

If you don’t understand an element of your malpractice insurance policy, it’s time to call a representative for clarification. It’s better to learn details now, when it may be possible to make changes, rather than later when you face a malpractice allegation.

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