Does your malpractice policy allow you to decline settling and fight unjust claims in court to the very end?

If you have a “Consent to Settle Clause” in you policy, in order to settle a case, the insurance company must have your approval. If you reject this settlement, you reject it without further penalty.

For instance: if you purchase a policy with $1M limits and you lose at trial after declining to settle, your insurance company will still be required to pay up to a $1M verdict.

Malpractice Suits are very personal, and the Southern Medical Association wants you to have the ability to fight a claim to the very end.

Having a hammer clause in your malpractice policy can be problematic in the event of a claim.

A Hammer Clause in your policy may read like this:

“Insurer will not settle or compromise any claim without the consent of the insured. If, however, the insured refuses to consent to a settlement or compromise recommended by insurer and elects to contest such claim or continue legal proceedings in connection with such claim, then insurer’s liability for the claim shall not exceed the amount for which the claim could have been so settled, plus claims expenses incurred up to the date of such refusal.”

Avoid policies with these hammer clauses at all cost.

A ‘consent to settle’ policy that requires the insurance company to have your approval in order to settle a case is most desirable.

The SMA Service’s exclusive Medical Malpractice program does not have a hammer clause and the consent to settle lies with the physician. We’ve aggregated the over 4,000 Southern Medical Association members to provide you with the underwriting discounts and concessions to independent physicians that would normally be reserved for large hospital systems.

Every malpractice insurance policy is going to contain a method, manner or time period in which a claim can be filed. The majority of insurance policies are written using the occurrence form but many others, especially professional liability policies are written on a claims-made form. These different forms have a major effect on your responsibility in the event of a claim, the actual cost of the policy and most importantly, how the company will respond to the claim:

Occurrence:

This policy covers claims made for injuries sustained during the life of the policy; even if the claim is filed after the policy has been canceled. An occurrence is an event that can result in the filing of an insurance claim.

Claims Made:

A claims-made policy provides coverage when a claim is made against the policy, regardless of when the claim event took place as long as the claim event took place after the ‘retroactive date’. If an insured elects to change insurance companies from one year to the next, it is important that the new carrier offer “retroactive” coverage back to the retroactive date to prevent any gaps in coverage.

While there are certainly pros and cons to both policies; in most cases, the claims made policy form is the most competitively priced option for the independent physicians.

Medical Malpractice claims made policies are issued one of two ways; they will either have an incident trigger or a written demand trigger.

Incident Trigger:

If your malpractice coverage has an incident trigger, the moment you report a bad outcome to your carrier they become responsible for any future claims based on this incident.

Written Demand Triggers:

Under a written demand trigger, you may know of a bad outcome but a carrier will not accept responsibility of a claim until a written demand for money or a lawsuit has been made.

If affordable, an incident trigger form should always be considered.

Demand Trigger policies may force a physician practice with a known incident (however large or small) to remain with their current insurance company for years to avoid a gap in coverage. There is the potential that the carrier could significantly raise rates or adversely change coverage forms while awaiting a written demand or the Statue of Limitations to pass.

Electronic record-keeping and digital communications are now used by most businesses. Too often businesses underestimate the risks of data security breach & regulatory violations.

It is important that you know if your general liability or malpractice insurance covers privacy and regulatory exposures. Unless you purchase standalone coverage, your policies most likely specifically exclude data and regulatory related risk.

Have you budgeted for the cost of tail insurance when you retire?

Tail coverage can be extremely expensive. Depending on the carrier, the cost of your tail insurance could range from 150% to 250% of your final year’s premium. This is a sizable amount for any physician but can be especially expensive for high risk specialties. Many standard malpractice carriers have free retirement tail provisions after the age of 55 and after 5 consecutive years of coverage. If you retirement is around the corner, this provision may be prohibiting you from looking at more affordable malpractice options.