Employer-Provided Malpractice Insurance: When Should You Get Your Own Policy?
Know what to look for in your employer’s policy — and what to ask — before you buy your own.
Image via Unsplash.com/Pablo García Saldaña
What Is Employer-Based Malpractice Insurance?
If you work in healthcare, you may be covered by your employer’s medical malpractice insurance — also called medical professional liability. These policies cover your employer and any of their employees for the cost of lawsuits if they’re ever named in a medical malpractice claim.
Getting sued can be expensive. If you’re covered, the insurance carrier can foot the bill for defense costs and any payouts for damages or settlements, as long as it falls within the policy’s limits.
What Questions Should You Ask Your Employer About Their Insurance Policy?
If you’re covered under your employer’s malpractice insurance, there are some questions you should ask your employer to find out how the policy might protect you (or not). Some of these questions might include:
- Does the insurance company choose my attorney, or do I get to decide?
- Can I choose a separate attorney if I think there’s a conflict of interest between my defense and my employer’s defense?
- Will I be able to choose to either settle a case or go to trial (also known as the “consent to settle option”)?
- Will this policy cover me for work done outside my employer’s facility or for work not included in my official job description?
- Do I have my own separate limits under my employer-provided coverage, or do I share a total limit with other employees?
- If I change jobs or retire, will I still be covered under my employer’s policy if someone later makes a claim against me for my work while I was employed?
- Do my defense costs get paid out of the policy’s limits of insurance (which will reduce the amount of money to pay out any judgments or settlements), or are they paid outside of the limits of insurance?
What Is Supplemental Malpractice Insurance?
Supplemental malpractice insurance — sometimes referred to as secondary insurance or an individual policy — is a policy you buy yourself that is in addition to coverage you might get from your employer.
In the event that you’re named in a claim — depending on whether one of the policies is primary — the two insurance carriers (i.e., yours and your employer’s) can coordinate a defense and settlement strategy.
When Should You Get Your Own Malpractice Coverage?
It’s the million-dollar question: How do I know if I should get my own policy? According to New York-based malpractice attorney Richard Mermelstein, it all depends on what kind of control you want to have over your coverage and whether you want to protect yourself from things that might not be included in your employer’s policy.
Here are five reasons why you might want to consider getting your own malpractice policy, even if you’re already covered by your employer:
- To avoid conflicts of interest: Say you’re employed by a hospital, and both you and the hospital are named in a lawsuit. Even though you are both covered by the same insurance policy, if for some reason the hospital’s defense does not align with your defense, having separate policies would help ensure that you are each assigned your own attorneys and defended separately.
- To cover you for work done outside the scope of your employer’s policy: Your employer’s malpractice policy might have strict limitations on when it will cover you (e.g., only when you’re working on-site at your employer’s location). If you moonlight as an independent contractor or perform work outside your specific job description — even if it’s volunteer work — your employer’s insurance carrier might not defend you in the event of a lawsuit.
- To avoid gaps in coverage: If you maintain continuous individual malpractice coverage, you can have more peace of mind when you change jobs because your individual policy will cover you during any gap in employment.
- To be covered against things not included in your employer’s policy: Your employer chooses the malpractice insurance policy, not you. So if you want certain things included, such as violations of the Health Insurance Portability and Accountability Act (HIPAA) or claims made against you to your state licensing board, you’ll need to make sure it’s in your policy.
- To access more coverage: Malpractice insurance policies have caps on how much the carrier will pay in the event of a lawsuit. If your employer-provided coverage runs out of limits of liability, you may have to pay any excess settlement amounts out of pocket. If you have your own policy, however, that excess could be absorbed by your individual policy limits instead. Kelly Hamer, a malpractice attorney in Florida, advises clients to buy additional individual professional liability insurance to provide more of a cushion to fight claims.
Are You More Likely to Get Sued If You Have Your Own Insurance?
No, you are not more likely to get sued if you have your own policy. Whether you’re covered or not isn’t a matter of public record.
Your name is often one of several listed in the suit, Mermelstein says. A plaintiff can always remove you from the claim once they’ve reviewed everyone’s insurance info, but having your own insurance won’t keep you from being named in the first place — and not having your own policy is not a guarantee you’ll be dropped from the suit.
What Should You Consider When Buying Your Own Malpractice Insurance Policy?
Besides cost and policy limits, there are a few other things you should consider when comparing carriers and policies for your own individual malpractice coverage. These include:
- Legal Defense: How does the carrier hire and assign their lawyers? And will you be able to choose your own? Insurance companies generally have their own lawyers they like to use, Hamer says. This could be an issue for health professionals who want to have a say in who defends them. Say, for example, a nurse was named in a lawsuit and Hamer represented her. If the nurse is ever named in a suit again, she might want the option of having Hamer defend her because she already knows and trusts her.
- Consent Clauses: Will you have the power to say “no” to a potential settlement offer? Can you push to settle or go to trial, even if the carrier doesn’t want to? Some policies include a “consent clause” (sometimes referred to as a “consent-to-settle” clause) that gives you the right to overrule certain aspects of your defense if you don’t agree with them.
- Hammer Clauses: If your policy contract does include a consent-to-settle clause, be on the lookout for a “hammer clause” to go with it. These clauses say that if you decide not to settle, the carrier may no longer be responsible for additional legal expenses and doesn’t have to pay out more than they would have settled for.
- Filling Coverage Gaps: What doesn’t your employer-based malpractice insurance protect against that you might want? Whatever your reason for seeking individual malpractice coverage, read through the scope outlined in the policy contract carefully to make sure the policy meets those needs.
- Limits of Liability: Anything above and beyond your per-claim and/or annual limit will need to be paid out of pocket. Something to consider is whether defense costs are included in that maximum amount (called “inside the limits”) — in which case, whatever the insurance company spends to defend you will reduce what’s left over for a settlement or payout.
Employer Malpractice Insurance Takeaways
If you’re covered under your employer’s malpractice insurance, request a copy of the policy. Read it carefully to verify that you feel covered and you’re comfortable with the amount of control you’d have over your defense in the event of a claim.
If you have more questions, ask lawyer friends for their opinion, or look for an online forum where you can ask medical industry veterans for their anonymous insight.
The views expressed in this article are those of the author and do not necessarily reflect those of Cinch™ or Berkshire Hathaway Specialty Insurance Company. This article (subject to change without notice) is for informational purposes only, and does not constitute professional advice. Click here to read our full disclaimer
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