As a resident, malpractice insurance probably isn’t at the top of your list of things to worry about. After all, we’re generally covered by the programs and hospitals we practice in during our training. Unlike our medical counterparts, who after finishing residency will typically have their premiums paid for by their new employer, the majority of dental residents and dentists will have to purchase their own malpractice coverage in solo practice as independent contractors or associates. Here are some of the things I’ve learned about malpractice insurance over the past year.
Claims Made vs. Occurrence Policies
In future posts we’ll look at a number of different features about malpractice insurance. For now, let’s take a closer look at the differences between types of policies. It’s important to understand that you have two types of policies available to you — claims made and occurrence policies. You don’t need to be an expert on this, but it’s important to at least vaguely understand what makes the two different.
In simplest terms:
Claims Made — The policy in place the day the patient files the claim is the policy that will respond to the claim.
Occurrence — The policy in place at the time treatment is delivered is the policy that will respond to the claim.
Why does this even matter?
Unlike disability insurance policies, malpractice companies can make changes to a policy. They can change the consent provision. They can also exclude certain techniques or procedures. What this means is that if you have a claims made policy, you can be held retroactively to that new standard. For example, say you treated a certain patient in 2017. In 2018, the insurance company changes the consent provision. In 2019 the patient files a suit. By virtue of holding a claims made policy, your policy will respond to the claim as it was written in 2019! It’s how it was written the day the claim was filed. Essentially, you can be held retroactively to a new set of standards.
When possible, get an occurrence policy. This will provide you more guarantees. No surprises here, but a claims made policy gives the insurance company more flexibility.
Limits
Another difference between claims made and occurrence policies is regarding limits. You’ll often hear people say that the carry “1/3” or “2/4.” This refers to coverage limits in millions of dollars. The first number is the amount of money available for a single claim. The second number is the amount available for all claims combined that year (an aggregate, if you will). How the limits compare is different between a claims made and occurrence policy.
Claims Made — Your limit is a static limit. The limit is always 1 mil/3 mil no matter how long you have the policy.
Occurrence — Each year of limits is stacked on top of the other. In other words, for a 1 mil/3 mil limit over 10 years, you technically have a 10/30 million limit available to you. Will you ever have a $10 million dental claim? Probably not. But might you have multiple claims over a span of time that add up to over $1 million? Hopefully not, but certainly a possibility. In which case an occurrence would be more advantageous.
Any thoughts about malpractice insurance? Do you think that claims made and occurrence policies are really that different? Comment below!
Loading ...
No responses yet