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In part 5 of our look at malpractice asset protection strategies, we cover the basics every physician must know about medical malpractice insurance.
Asset Protection for physicians has three primary layers, compliance, insurance, and legal tools that separate assets and liabilities.
The National Association of Insurance Commissioners (NAIC) defines an RRG as follows:
Risk Retention Groups (RRGs) are liability insurance companies owned by its members. RRGs allow businesses with similar insurance needs to pool their risks and form an insurance company that they operate under state regulated guidelines. RRGs are formed using a combination of state and federal laws under the auspices of the Federal Liability Risk Retention Act (LRRA).
All insureds of an RRG must be owners of the RRG, and all owners of the RRG must be insured. RRGs may be formed under a state's captive or traditional insurance laws. The RRG is domiciled in one state but may do business in any other state by completing a registration process and designating the state’s commissioner as agent for service of process.
There are two different kinds of malpractice insurance: Claims-made and Occurrence. One of the most concise descriptions of the differences between the two come from a summary provided by the AAAPR a physicians and provider recruiting organization:
Claims-Made insurance indemnifies you from malpractice “claims made” by patients only when that policy is active. If you leave a job that has claims-made insurance, you will have to purchase “Tail” coverage. The tail coverage will protect you in case a claim is made after the policy lapses for an incident that occurred when you were covered.
Occurrence-Based insurance provides coverage for any incident that occurs when the policy is active, regardless of when a claim is made. In other words, you do not need to purchase Tail coverage. Occurrence is generally considered the “better” insurance, as it provides more security and less hassle. It is, of course, more expensive.
The report also adds this important caveat about tail insurance for practicing physicians that are moving from one practice to another.
If you are already practicing and have claims-made coverage, one negotiating point would be the purchase of tail coverage, which can be tens of 1000s of dollars. It might be in your new partners’ best interest to provide tail coverage for you as you join their practice.
This an exceptionally fact-specific question; assume your policy covers only exactly what it says it does and not a single other issue or dollar. If you are found labile for acts resulting in bodily injury, medical expenses, property damage, or wrongful death, the Insurance Information Institute (III) identifies some basic expenses that the majority of policies cover to protect you from the costs of defending or settling a lawsuit including damages themselves
Again, this is a policy-specific question, but there are some acts and occurrences that are generally excludedon an industry-wide basis.
All insurance is not the same, know the details of your specific coverage.