You are moving on to the next big step in your career, leaving behind a residency or fellowship program that managed many of your day-to-day professional needs—including medical professional liability insurance coverage. Every practicing physician needs the protection of medical professional liability insurance, also called medical malpractice insurance, to protect against lawsuits and other legal exposures.
Chris Albano, the national account manager at the AMA Insurance Agency Inc., an AMA subsidiary, outlined some of the basics that physicians should know about medical professional liability insurance during an episode of the “AMA STEPS Forward® Podcast.”
Physicians who join a hospital, health system or group practice might be covered under the institution’s policy, Albano noted. But “if the physician is going out on their own or working for a smaller practice under another physician, they would need to have their own individual policy,” he explained. And, a physician in those practice settings will be responsible for shopping for the coverage and paying the cost of the coverage.
“There's often new-doctor discounts, which are fairly robust, especially in the first year,” Albano said. “That's a significant amenity many carriers offer, so it's really going to depend on the type of policy and their specialty. You would want to have a reputable carrier—a carrier with an outstanding financial rating—and an outstanding reputation for handling claims in the event that you ever are brought into a lawsuit.”
Albano detailed two major types of medical professional liability insurance policies:
- A claims-made policy covers a claim when it’s filed during the policy period, from the first date of coverage through the policy period, but not after.
- An occurrence policy covers any claim arising from an event that happens during the policy period, regardless of when the claim is filed.
“Essentially, an occurrence policy has tail coverage built into it,” Albano said. “You don't have to worry about purchasing it or anything like that. It's already in there. And that's why I always say occurrence is the stronger policy.”
Purchasing tail coverage separately typically will cost the physician policyholder 200% of their final-year premium on the policy, he noted.
Find out how physicians can save hundreds of dollars a year on insurance when joining the AMA.
Keep your declarations pages!
One key for the new individual medical professional liability insurance policyholder: hang on to copies of the policy’s declarations page, which lists the details of coverage.
Albano advised keeping a copy of all the declaration pages that you get every year at policy renewal.
“That's something always good to have just so you have a record of all the coverages you've had,” he said. “So if a claim were to come in, you would just reach out to the carrier—even though they would probably have it—it's still something you would want to keep for your records. The cancellation notice, which would show the day that the policy terminated—that's something I would keep.”
Residents or physician fellows who are transitioning to full-time practice in an employment setting should “always check to ensure that the limits are going to be robust enough that if a claim came in, it would be covered,” Albano said.
“Something I always advise physicians to do when they're in this kind of setting,” he added, “is to put into the contract that the employer will provide the tail coverage for them when they leave the practice or if they're terminated or whatever, and so they are not responsible to purchase the expensive tail coverage themselves.”
Sadly, Albano has “seen so many times where it wasn't, and a doctor worked somewhere for a few years and then they were leaving and going on to a new practice and they were stuck with this really expensive tail bill—and it's unfortunate because they just didn't know.”
The AMA Transitioning to Practice series has guidance and resources on deciding where to practice, negotiating an employment contract, managing work-life balance, and other essential tips about starting in practice.
Dive deeper:
- 6 questions to ask before signing a physician employment contract
- Why physician private practice should be on your radar
- Final-year residents: Are you up to speed with your job search?
- Say goodbye to physician residency—and medical student-loan debt?
Other practice situations
Physicians opting to work as independent contractors or locum tenens should know that those have different implications for medical professional liability insurance coverage, Albano said, noting that these are “two totally different scenarios that often get mixed up.”
For locum tenens, “what will happen is a covering physician will come into the practice and they'll be covered under the doctor's policy that is active at the practice.”
The implications for physicians who work as independent contractors are “completely different,” Albano said. “They're going to have to purchase their own coverage—so they're going to go through a regular application process. Now, if you're an independent contractor and you're working at multiple locations, you'll want to ensure that the coverage you have will cover you at all those locations; it's not limited to one practice. So that's always something to check.”
If you are looking for your first physician job post-residency, get your cheat sheet now from the AMA.
Get tips on your transition to practice
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Don’t be afraid to ask
Albano recommends asking prospective insurers as many questions as you need.
“If you're not sure about something, there are people who can help you. There's no such thing as a silly question because the more educated you are on this, the easier it'll be for you to find coverage that works for you,” he said. “There are many, many, really good carriers out there. Some might fit you better than others.”
Notably, medical professional liability insurance rates rose for the sixth year in a row, and almost every part of the country is seeing rates increase—with some pockets of the country harder hit than others, according to a recently published AMA Policy Research Perspectives report (PDF).
In response to the growing need for comprehensive, cost-effective medical professional liability insurance coverage, AMA Insurance has forged relationships with top-rated national insurance carriers to offer physicians robust coverage choices.
Their team of knowledgeable insurance specialists have more than 60 years of combined experience in medical professional liability insurance. They are noncommissioned, salaried employees and have no sales quotas to meet. And with the recent rate increases for this coverage, it’s recommended that you shop your plan annually through a trusted source such as AMA Insurance.
