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Why Buy Professional Liability If You Are "Covered" by Your Practice Facility
Contributed by CMF Group

The CMF Group is often told by Healthcare Professionals that either they don’t feel they need individual coverage because they are “covered” by their hospital or other facility or that their facility has advised them not to obtain individual coverage.

Here are some of the more prominent points you should consider:

  • Why would you put your professional life in someone else’s hands based on only oral advice or just intuition? (Have you seen their, and your, policy?)

  • Would you believe anyone else if they said, in effect, “Trust me and don’t ask for details”?

  • Even if you’ve seen the policy—are the limits separate for each professional or are they shared?

  • If a claim arose naming you, some staff physicians and the facility, whose interests would the attorney put first? Yours?

  • Why would a facility advise a Professional against obtaining individual coverage at the individual's cost? Perhaps the facility would prefer the care giver did not have independent legal counsel at the time of a loss.

  • Wouldn’t a facility have an overriding incentive to settle a suit at the lowest cost, regardless of your individual culpability and the impact it has on your career?

  • Many large facilities maintain a large “self-insurance” deductible in their insurance program. This means the facility is the insurer for the “first layer” — often $1,000,000 or more — of coverage. In effect, there is no insurance company responsible for this first layer. The facility pays those losses itself. Consequently, the facility has even more incentive to pay the claim, not fight for your innocence.

  • The facility could decline coverage at the time of the loss on the grounds that you did not follow its’ instructions and protocols.

  • Most hospital and large facility's policies, (including the self insurance layer) are “claims made” not occurrence (as our policy). Remember, this means if the claim is made later, after you have left the facility, you may not be covered.

  • Medical facilities often obtain their insurance from so-called “Excess and Surplus Lines” or non-admitted carriers. These carriers are not subject to state guarantee funds. If they fail, there is nothing to step in and guarantee claims payments or defense costs.

  • As Medical Facilities consolidate and close, their insurance programs disappear and change. Would you still be covered 5-7 years after a facility closes (the typical claim life)?

  • Would you be covered for the professional advice you gave a friend during your vacation to Mexico?

  • Would you be covered for the professional advice you gave on the sidelines at a sporting event?

  • Would you be covered at a part-time job?

Your own policy should answer all these questions “yes”:

  • Do you control it?

  • Is it "occurrence"—it covers you tomorrow for what happened today?

  • Is it 24 hours, 365 days coverage?

  • Is it worldwide coverage?

  • Does it cover you in the hospital, on vacation, as a church volunteer, etc?

  • Does it provide you with your lawyer, with no limit on defense cost, protecting your needs, not someone else’s?

  • Is there no deductible, providing first dollar protection?

  • Is the carrier rated A++, admitted in all 50 states and subject to guarantee funds where they exist and apply?

  • Will your coverage be unaffected by consolidations, mergers, and closings?

  • Is the policy cost reasonable and are the limits adequate?

  • Does it cover you irrespective of facility directives as long as your actions are within your scope of practice as determined by the professional regulatory body for your profession in your state?

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Updated February 20, 2001