It is widely known that the dermatology industry has a much lower risk of medical malpractice suits than most other fields. For one, the surgical risk is much lower. In addition, many treatments can be completed with local anesthetics, and many skin diseases may not be life-threatening (save for one or two). But even in the case of melanoma, difficulties do arise, and with telemedicine on the rise, one can experience new legal issues.
It goes without saying that as the practice owner, finding a reasonable premium is essential. But even if you’re not the one paying for the actual policy, you should still take care to understand what it covers. In addition, it’s important to remember that maintaining a healthy relationship with patients and keeping complete records yield favorable results in matters of malpractice.
Malpractice insurance protects dermatologists from certain liabilities related to wrongful practices. These instances may result in bodily harm, increased expenses, and damages from the cost of defending these suits in court. At the very least, your medical malpractice policy should cover professional services.
Types of Medical Malpractice Insurance Policies
Services offered by practice can vary, especially in dermatology. When applying for medical malpractice insurance, dermatologists should list the specific procedures their practice offers when applying for a policy. For claims, there is a stringent difference between coverage regarding simple medical dermatology versus surgical or even cosmetic procedures. Specifying exactly what you need to cover will ultimately affect the coverage premium and, of course, what type of policy is available. In addition, it’s important that the dermatologist knows the difference between an occurrence policy and a claims-made policy.
Claims-Made Malpractice Policy
Claims-made policies simply provide coverage for issues that arise while the policy is active while the event happened and when the suit is filed. For instance, if a patient sues the dermatologist in 2022 and the policy was last paid for 2021, they would not be covered under a claims-made policy. Thus, if you choose a claims-made malpractice policy, you’re encouraged to stay with the same insurance provider, so coverage is not interrupted.
If the dermatologist switches providers or changes careers, that physician will require what’s known as tail coverage. Also known as extended reporting endorsements, tail coverage is an important option to keep in consideration. Due to the fact that claims-made insurance only covers the physician if the incident happened while the policy is active and reported to the provider while the policy is active, one cannot switch providers and start a new policy elsewhere without purchasing tail coverage. (One may also purchase nose coverage from the new insurance provider.)
In some instances, tail coverage will be added into claims-made policies. However, if it is not, it’s essential to know that it can be purchased. Further extended coverage options include the aforementioned nose coverage for specific claims that happened while an old (previously terminated) policy was active. Ultimately, it is essential for the dermatologist to have continued medical malpractice insurance even during transitions due to issues that may arise from previous years. In addition, claims-made policies are often cheaper during the first year.
Occurrence Malpractice Policy
In the case of occurrence malpractice insurance, the policy works similarly to typical car insurance coverage. This type of malpractice affords the policyholder coverage of issues that happen while the policy is active, no matter when the claim itself is made (or if the policy has since been canceled). Taking the previous example of a dermatologist being sued a year after coverage has ended, they would be covered in this instance.
Occurrence policies are typically more expensive than the aforementioned claims-made policies; this is due to the length of coverage a physician can get in comparison. Ultimately, a dermatologist does not need tail coverage for an occurrence policy because the policyholder is covered during the policy period, even if the claim is made at a later date. However, there may be rare exceptions if the insurance provider goes out of business.
Defense Costs and Policy Limits
In the long run, it’s often beneficial to choose a malpractice policy that covers defense costs outside the limits of liability. For example, if a physician’s policy does pay expenses outside the limits, then your actual defense costs will not go beyond your policy. This means you will still have money per occurrence available to cover a potential award for a claim. For instance, if you are afforded $1M per occurrence, you would still retain that to cover the claim in the event your policy pays defense outside the limits of liability. However, if the policy only covers inside the limit of liability, you would then only have $900,000 for that claim.
Incident Reporting or Written Demand Providers
Each insurance company you consider will define malpractice claims differently. This is something each dermatologist should review when choosing a policy. Incident reporting refers to the ability of the physician to report a negative outcome to the insurance provider as a new claim. In a claims-made policy, it requires that the incident occurs during the active policy AND is reported while the policy is still active.
Conversely, if the policy provider requires written demand for damage in order for a claim to be made, then there is no claim until the dermatologist is sued (and if it is after a claims-made policy has lapsed, there is cause for concern). Much like buying future claims, it is a similar situation for policyholders.
Outside of Your Policy
In some cases, dermatologists may find it necessary to find coverage specifically for other types of liabilities such as errors in billing, cyber security, business management, wrongful termination, or salary disputes.
Be Sure to Review Policy Exclusions
One of the most important items on your checklist should be to review the policy’s exclusions; in other words, what it will not cover. It’s essential to not only consider the procedures you are offering now but what you might add in the future.
