Medical malpractice insurance is an important part of protecting a medical practice and the people who work in it. It can pay covered defense costs and covered claims, subject to the policy’s terms. Strong financial planning starts with understanding that coverage and identifying where other risks remain.
Know What Your Policy Covers
A large verdict in a news story does not establish that your own coverage is inadequate. Review the actual policy with your insurance professional and, where appropriate, coverage counsel.
- What are the per-claim and aggregate limits, and are any limits shared?
- Are defense costs paid in addition to the limits or deducted from them?
- Which people, services, locations, and activities are insured?
- What exclusions, deductibles, reporting duties, and settlement provisions apply?
The National Association of Insurance Commissioners’ overview explains the basic role of medical professional liability coverage. The policy and applicable law determine the answer in an individual claim.
Watch for Gaps When Coverage Changes
Occurrence and claims-made policies operate differently. An occurrence policy generally responds based on when the covered incident happened. Claims-made coverage depends on when the claim is made or reported, the retroactive date, and the specific policy terms.
Changing employers, switching insurers, or retiring can create gaps. Ask about extended reporting coverage, often called tail coverage, and prior-acts coverage before making a change. The Texas Department of Insurance shopping guide explains these distinctions; its Texas-specific rules should not be assumed to apply in every state.
Separate Different Kinds of Risk
Professional negligence, employment disputes, billing investigations, contract obligations, and personal liabilities raise different issues. Coverage for one category does not establish coverage for all of them. Likewise, damage caps vary by jurisdiction and claim; they are not a substitute for reviewing insurance.
Intentional or criminal conduct can raise serious coverage and legal problems. A billing error does not by itself establish fraud, and an asset protection structure does not eliminate regulatory obligations or government enforcement powers.
Build a Coordinated Plan
Insurance, sound practice procedures, appropriate entities, available exemptions, and lawful trust planning may work together to provide strong protection. None should be described as guaranteeing that a claim will fail or that every asset will be protected.
If a judgment exceeds available coverage, collection depends on ownership, exemptions, liens, applicable law, and the particular facts. It does not automatically expose every business and personal asset.
Review your coverage regularly and plan before a dispute develops. If a claim, demand, or investigation already exists, notify the appropriate insurer as required and obtain legal advice before changing ownership or moving assets. Do not cancel or reduce appropriate insurance because you have an asset protection plan.
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