Do You Need Your Own Medical Malpractice Insurance?

While none of us as nurse practitioners intentionally messes up, the reality is that our role comes with a high level of responsibility. Misjudgments or mishaps can potentially lead to harm. Failure to document decision making can come back to bite you. So, as healthcare providers, we protect ourselves by purchasing liability coverage. Most often, such coverage is purchased for us by our employers. Lately, I have received a number of questions from nurse practitioners asking if they need to purchase their own supplemental policies as well. 

In an ideal world, healthcare providers would all be over-insured, practicing with the reassurance of complete financial backup should anything go wrong. In reality, however, medical malpractice insurance can be a significant expense and has limits. Carrying supplemental personal coverage outside of one's employer is costly and the benefits of doing so must be carefully considered. 

If you're a nurse practitioner wondering if you should purchase supplemental liability coverage, the first step is to analyze the plan offered by your employer to identify gaps you may need to fill with your own policy. Here are a few key things to consider as you evaluate your options. 

Type of Insurance

There are two main types of medical malpractice insurance policies, claims-made and occurrence. Claims-made policies cover policy holders for events that take place and are reported during the time the medical provider holds the policy. For example, if a nurse practitioner had a claims-made policy and retired without insurance, he or she would be personally accountable for any claims filed against him/her during retirement. 

Occurrence policies offer coverage to medical providers for events occurring during the period when the provider holds the policy regardless of the length of time that has passed before a claim is filed. For example, if a nurse practitioner treated a patient in 1992 and was insured by Company A with an occurrence-made policy and the patient filed a lawsuit against the NP in 2014, Company A would still be responsible for covering the nurse practitioner for this incident, regardless of where/if the NP is currently employed.

In some cases, large employers may elect to become self-insured. This means they cover the cost of defending malpractice claims rather than purchasing malpractice insurance for employees. Under such plans, nurse practitioners would only be covered for acts that occurred during work hours. NPs working for self-insured employers must either perform only services covered by the employer, or find their own additional coverage. 

What is Covered

Nurse practitioners commonly think of clinical scenarios when they imagine being sued. In reality, the legal liability of practicing as an NP is much greater. Administrative issues are another reason nurse practitioners may need legal counsel. Administrative issues include review by regulatory bodies such as the Board of Nursing. Administrative complaints may be filed along with a clinical lawsuit, or as an allegation of unprofessional behavior or negligence by an unhappy patient or coworker. Many insurance policies provided by employers do not cover defense for administrative claims. You may consider purchasing a supplemental policy that covers administrative claims. 

Coverage Amount

Medical malpractice policies outline the most that will be paid for one claim. This is known as the "individual limit". Policies also outline the most that will be paid in any policy year for all claims. This is known as the "aggregate limit". For example, a policy with limits of $1,000,000/ $3,000,000 covers a maximum of one million dollars per claim made and a total of three million for all claims made against the provider during the policy year.

Your state's laws may specify the minimum amount of malpractice insurance you are able to carry. In some states, this is as low as $100,000/$300,000. Even if carrying a low limit policy is allowable in your state, this type of plan offers minimal coverage leaving you financially exposed. Most standard medical malpractice policies carry limits of $1,000,000/ $3,000,000. Make sure the policy offered by your employer extends at least this amount of coverage. If not, you may want to purchase your own supplemental plan. 

Your Scope of Practice

Medical malpractice policies are often specific to the setting in which the nurse practitioner practices. Settings like emergency medicine, neurology, and ob-gyn, for example, are considered high risk specialties. Plans for providers working in these areas are often more costly than those for other areas. If you perform services outside of those covered by your employer's plan, purchasing your own liability coverage is a must. 

What Happens When You Quit

If your employer offers a claims-made medical malpractice policy (which most do), you will need to purchase supplemental insurance if you leave. That is, unless you obtain new employment with liability coverage to pick up where your prior policy left off. This supplemental insurance is referred to as tail insurance and covers you for prior acts. Maintaining a tail policy is essential for NPs as malpractice claims are often filed years following the actual incident. 

Other Considerations

In the case of a medical malpractice claim, often both the employer and healthcare provider are named as defendants. In such cases, your employer will naturally look out for their own interests first. Some nurse practitioners feel that carrying their own malpractice insurance, rather than only that offered by their employer better serves their personal interests. 

Do you carry your own supplemental medical malpractice coverage?

 

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