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It's important to review your policy limits regularly to ensure they're meeting your needs.

What Should I Consider with Malpractice Policy Limits?

QUESTION: I have $100,000/$300,000 in limits on my malpractice insurance policy. Since I've been in practice for a while and haven't increased it, I'm wondering if this is enough. What levels of policy limits are considered sufficient for most doctors?

ANSWER: Though some D.C.s may still be well served by lower policy limits, you should re-evaluate your coverage, especially since you’ve had the same limits for quite some time.

In determining if the $100,000/$300,000* limit is right for you, it’s important to remember that when the $100,000 policy limit was first established, healthcare costs were lower and runaway jury verdicts were very rare. In this day and age, damages can easily exceed $100,000, especially in cases where the patient has sustained a serious injury or an enduring medical condition, due to escalating healthcare costs. Some D.C.s mistakenly believe that having low policy limits will protect their assets in a malpractice lawsuit because attorneys will only go after the amount of insurance coverage.

The reality is that lower policy limits can expose a D.C.’s personal assets during a malpractice suit. The reason for this is that lawsuits are often a process of negotiation, and low policy limits can restrict options because there is less room for such negotiation. If the doctor’s policy limits are inadequate compared with the plaintiff’s request for damages, there is little incentive to reach a settlement even if the doctor gives a “consent to settle” due to the circumstances of the case.

A plaintiff attorney has nothing to lose by taking a case to trial if the attorney believes the case is worth significantly more than a doctor’s limits. Then, if you are found liable, any damages above the policy limits will become your obligation.

Another factor is outside contractual requirements. Third-party payers, for example, often require you to carry malpractice insurance with certain limits of liability, so be sure to ask the provider relations department of any network in which you participate for their requirements. In addition, state statutes may require coverage minimums.

The Solution

Review your policy limits regularly to ensure they meet state and third-party requirements. And, select limits that not only protect your patients but also yourself in the event of a malpractice allegation. For just a relatively small percentage increase in your annual premium, you can increase your policy limits tenfold to the most common level of $1 million/$3 million.

The first number is the maximum amount your policy will pay for any one claim; the second number is the total coverage for all claims during each annual policy period.

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