Understanding the Medical Malpractice Insurance Policy
March 1, 2016
Professional liability is negligence by a health care provider resulting from a failure to use due care or where the standard of care falls below what is expected from a person in a particular profession. A medical professional liability insurance policy covers bodily injury or property damage as well as liability for personal injury such as mental anguish. Most policies also provide coverage to the physician for the costs in defending a claim. When discussing your medical malpractice insurance with your broker it is important to understand what is expected of you should a lawsuit(claim) or threat of a lawsuit occur.
Duties of the insurance company
Defense and indemnity. The insurance company has 2 primary obligations under a medical malpractice policy: the duty to defend and the duty to indemnify. The duty to defend requires the insurance company to retain a lawyer to defend legal claims that are brought against the policyholder /healthcare professional. This duty also requires the insurance company to pay expenses relating to the defense. The duty to indemnify requires the insurance company to pay an amount up to the policy limits for a settlement or judgment on any covered claim against the policyholder.
Assignment of counsel. An insurance company will generally retain counsel for the policyholder when a lawsuit is filed, although some will do so early on once a notice letter is received. Typically, the insurance company will assign a lawyer who has been approved to work on its cases and will often honor a policyholder’s request for a specific attorney or law firm. The insurance company pays the fees of the lawyer it ultimately retains. While the policyholder may obtain a personal lawyer in addition to counsel retained by the insurance company, the carrier will not pay those fees.
Consent to settle. Some insurance policies have a “consent clause” that requires the insurance company to obtain the policyholder’s consent in order to settle a case. By giving consent, the policyholder places the power of decision regarding settlement in the hands of the insurance company. Settlements, like adverse judgments, are reported to the National Practitioner Data Bank.
Duties of the insured policyholder/physician
Prompt notice. To preserve coverage, the policy typically requires the insured to provide the insurance company with prompt notice of any potential claims or lawsuits against them. An insured’s failure to provide prompt notice could jeopardize the insurance company’s obligations both to defend and to indemnify. As such, with respect to coverage, it is in the policyholder’s best interest to provide prompt notice.
Cooperation. A policy also typically contains a “cooperation clause,” which requires the insured to cooperate in the defense of a legal claim.
There are significant differences in professional liability policies and insuring companies. The Armstrong Company Insurance Consultants represents several professional liability insurance companies and we understand the complexities of medical malpractice insurance. (Read Our Testimonials) Even if you just renewed with your current insurance company, it’s never too early to contact us. You can take advantage of the benefits of being an Armstrong Company Insurance Consultants client prior to your coverage renewal.
Let our experienced licensed representatives help determine your coverage needs. The Armstrong Company Insurance Consultants understands medical malpractice insurance and the professional needs of our customers. The right coverage for you is unique – call us at 866-990-9286 or contact us via our “Request a Quote” online today to find out how to protect your business and your future with the right insurance. We are always here to provide service for you!