You’re getting ready to launch your career, which also means it’s time to consider malpractice insurance. Many who haven’t been involved in a lawsuit think “this won’t happen to me,” or “only bad dentists get sued.” Unfortunately, this is not the case. The likelihood of being involved in a lawsuit can increase or decrease based on practice location, the type of practice and the procedures you perform. A lawsuit isn’t necessarily the tool that measures “good” or “bad” dentistry, but the end result of a malpractice claim can be traumatic, time-consuming and expensive, regardless of the final verdict.
When it comes to malpractice insurance, you have two different coverage options: occurrence or claims-made. The major difference between the two types of coverage is whether coverage is triggered based on when an incident occurs or when an actual claim is filed.
Occurrence coverage is triggered the moment the treatment occurs, regardless of when an eventual claim is filed. Example: if a claim is filed in 2017 based on a treatment rendered in 2015, the 2015 occurrence policy responds.
Claims-made coverage is triggered when the claim is filed. This means that a policy must be in effect when the claim is filed. Example: if a claim is filed in 2017 based on a treatment rendered in 2015, the 2017 claims-made policy responds.
Because claims-made coverage is triggered when a claim is filed, these policies don’t cover claims filed after the termination or cancellation of the policy. To extend coverage after termination or cancellation of a claims-made policy, you will need to secure an extended reporting endorsement (called tail coverage) or your new insurance company must cover your prior acts. Occurrence policies do not require tail coverage.
DID YOU KNOW? Claims-made policies increase in price each year for the first five years until the rate is “mature,” after which the annual premium is very close to that of an occurrence policy. View a short video explaining policy options.
Policy limits are written as two numbers. The first number reflects what the insurance company will pay per claim/occurrence. The second number is the aggregate limit for the policy year.
Policy limits dictate the maximum amount of money your insurance company will pay on your behalf. How a policy’s limits of liability respond to claims is one of the major distinctions between occurrence and claims-made coverage.
Occurrence coverage provides a separate set of limits for each year you buy the policy, with respect to alleged errors occurring during the policy period, regardless of when a claim is made against you. Occurrence coverage doesn’t end when the policy terminates; instead, the limits under the policy remain available to pay future claims based upon incidents that occurred during that policy period.
Contrast this with claims-made coverage, which only provides limits for the claims made during the current policy year, so only the current set of limits is available to pay claims arising from all your previous years of practice.
Consent to Settle
Your policy sets forth the rights, duties and obligations of both the insurer and the insured with regard to settlement of a claim. This part of the policy is typically called the “consent to settle” provision. You will typically find your consent to settle provision embedded in your malpractice policy’s language.
Marketing material or “company philosophy” may state you have rights, but you should investigate the actual policy language to determine if you have a pure consent to settle clause. A pure consent to settle provision will require the insurance company to obtain your approval before settling any claim. There are no exceptions and no strings attached. Example language: “will not compromise any claim hereunder without the consent of the insured.”
Covering Your Practice
Just like you, your practice can be named in a malpractice lawsuit. If you are planning on owning a practice, you should consider two important coverage options: separate limits or shared limits.
Separate limits coverage
If you own all or a portion of your practice, your practice may be eligible for an entity malpractice insurance policy with separate limits of liability. This allows defense costs and indemnity payments to be paid on behalf of your practice – separate from your individual policy limits.
Shared limits coverage
If you have a solo corporation or a single-dentist practice, own 100% of your practice and have no employed or contracted dentists, then you may request to share your individual policy limits with your practice. This means defense costs and indemnity payments will be paid on behalf of both you and your practice under one shared set of limits.
Do all insurance companies handle the defense of malpractice claims the same way?
The short answer is no. It’s extremely important to select a malpractice insurance company that has expertise in malpractice liability litigation. They should understand the venue, specific state laws, as well as clinical dentistry issues and how they apply to the laws of your state. (Get a sense of what a malpractice trial experience is really like for a dentist.)
Why is risk management important?
Newly graduated dentists often underestimate the importance of risk management services. When a patient is in the chair and you are faced with a serious concern, it is too late to realize the value of specialized risk management services.
Many times dentists call their malpractice companies’ risk management teams when an area of concern presents itself. Here are a few scenarios in which a risk management team should be able to provide you with guidance:
- Dealing with an adverse event
- Dental records management
- Child custody and treatment
- Referral to a specialist
- Disgruntled patients
- Noncompliance with recommendations
Important questions to ask
It takes 650,000 minutes to complete dental school and an entire career to build your reputation. Take the time to ask these questions before choosing your malpractice carrier:
- Does the carrier deal exclusively in malpractice insurance?
- Is the carrier financially strong and stable?
- Does the company have the ability to offer different policy options like occurrence and claims-made?
- If they offer occurrence, what percent of their insureds have occurrence policies?
- Does the company have pure consent to settle?
- Ask about the experience level of the claims managers who will handle your claim.
- Does the company provide national coverage at a competitive cost?
- Many companies offering claims-made coverage will advertise “free” tail coverage upon retirement. Ask the company if you are eligible for free tail coverage:
- If you retire before the age requirement in the policy
- If you decide to go back to a residency program
- At the completion of a board exam or externship
- If you take time away from your practice to raise a family or any other reason
- If you haven’t been with the carrier for a certain number of years
- If you decide to join the faculty of a dental school or go into public health prior to retirement
- If you sell your practice and want to stay with the practice for a couple of years
- If you have claims experience and are not renewed by your company
This content was developed in cooperation with MedPro Group.