There are two primary types of medical malpractice insurance coverage. You’ll most likely hear about “claims made” and “occurrence” while you’re shopping around. The two have only a small difference that set them apart, but the difference is important.
Claims made policies cover any malpractice settlements for claims made during the period of insurance coverage. Occurrence policies cover malpractice settlements not for claims made during the period of insurance coverage, but the malpractice itself. In other words, you made a mistake during your coverage period (or were the subject of an all-too-common frivolous lawsuit), but you were sued after the coverage period elapsed. An occurrence policy will still cover the fallout damage, even after the fact.
You’ll also hear about tail versus nose coverage. When you discontinue a policy, you might have the option to extend tail coverage. This will act as an occurrence-based policy does, and provide coverage for new legal action that occurs after you discontinue the policy but for events that transpired while the old policy was in effect. Nose coverage does the same, but is included in the new insurance policy.
The amount of coverage you’ll want will be determined by the size of your practice. As your business grows, so too should the amount of coverage you purchase. Many policies will have a ceiling for litigation costs and attorney fees, so beware of potential pitfalls. How much you’ll pay is dependent on both size of the practice, and the practice area itself. You can probably expect to pay tens of thousands, but some pay substantially more.
It’s also important to acknowledge the limits that medical malpractice insurance will have on your personal life and job. If you don’t like what you’re doing, you might not be able to just up and leave–the cost of tail coverage can be staggering. You might want to leave your practice to join someone else’s, but that too might be cost-prohibitive. And unless you’re incredibly wealthy, you can probably forget about working part-time with your own practice. Unfortunately, most doctors don’t learn these pitfalls until after they’re certified to practice!