Today's Practice: Changing the Business of Medicine TP2018Q2DigitalEditionWeb | Page 47
A Best Practices Guide
Russ Madio
should also be given as to whether the claim expenses are
within or in addition to the policy limits.
What is the difference between “claims
made” and “occurrence” coverage?
There are two basic types of malpractice insurance:
occurrence and claims-made. In recent times, malprac-
tice insurance companies offer both occurrence and
claims-made policies, so you can decide which is best for
your individual circumstances.
It is important to understand that both types of policies
have the same coverage terms and conditions and will
provide you with a defense as previously described. The
difference is how and when coverage is triggered.
An occurrence policy provides coverage for claims
having alleged incidents that occur anytime during the
policy period regardless of whether the policy has
expired as long the alleged incident occurred while the
policy was in force at the time of said incident. For
example, if an act or omission allegedly causing an
injury occurs today, then the occurrence policy that’s in
effect today would cover you against a malpractice
claim, regardless of when that claim is made.
Claims-made forms provide coverage against claims for
alleged incidents that both occur and are reported
during the coverage period AND policy period. The
coverage period begins at what is called the retroactive
date, or “retro” date. Claims-made coverage is triggered
when: 1) The alleged injury occurs on or after the
policy’s retro date and 2) a written claim is made and
reported during the current policy period or within the
term of the policy or any extended reporting period
following the current policy period, generally 60 days
following termination of the policy. Extended reporting
endorsements can usually be purchased under a claims
made policy in a way converting this claims made form
into an occurrence form for an additional premium.
What is a “consent to settle” clause
within a policy?
“Some policies have
clauses that limit an
insured’s decision whether
to settle a case.”
not settle a claim. Virtually all current carriers provide
policies naming the insured who is authorized to give
consent to settle. They are not all the same, however.
Some policies have clauses that limit an insured’s
decision whether to settle a case. Two variations are as
follows:
A ”hammer” or “modified hammer” clause may be
within the policy wording. Should a policy contain a
hammer clause, and during the claim the insured refus-
es to consent to any settlement recommended by the
insurance carrier, the insured becomes responsible for
any judgment in excess of the proposed settlement
amount. A settlement may save the insurance carrier
significant money by shortening the litigation process,
but it forces insureds to make difficult decisions as to
whether to continue fighting and prove their inno-
cence. Insureds must therefore consider the impact on
their own finances should they press on with the claim
with a policy containing a hammer clause.
An arbitration clause is another provision found in
medical malpractice liability policies that affect an
insured’s consent to settle. If an insurance carrier
deems an offer to settle a claim as proper and the
insured is withholding consent, the insurance carrier
can employ an arbitrator to decide if consent is being
unreasonably withheld. Should the arbitrator decide
that the insured is being unreasonable in withholding
his or her consent, the insurance carrier can proceed to
settle the case without the insured’s consent. This
situation may impact your reputation and profession,
so it is important that you take these policy terms and
conditions into account when reviewing your coverage
options.
A very critical characteristic of a malpractice in