Not-So-Obvious Considerations for Professional Liability Insurance

Abstract

September 1, 2005, was the 2-year anniversary of the effective date of the Texas medical malpractice tort reform laws. These provisions are primarily set forth in Section 74.001 et seq. of the Texas Civil Practice and Remedies Code. Available and affordable professional liability insurance for health care providers was a primary reason behind the drive to pass this legislation. Now that this legislation with its damages caps is in place, additional professional liability insurance carriers have made, or are considering making, a return to the Texas market. New competition in this area of business will hopefully result in better premium rates. Since health care providers may now have more insurance carriers to choose from, I wanted to take this opportunity to mention some not-so-obvious factors to consider when selecting a professional liability insurance carrier. In simplest terms, professional liability insurance provides a policyholder two benefits. First, this insurance provides a specific amount of money (the insurance policy “limits”) from which to pay a settlement or adverse judgment in a professional liability claim. This benefit is referred to as “indemnity,” or the “duty to indemnify.” Second, this insurance pays for legal representation in the context of a health care liability claim. This is referred to as the “duty to defend.” The duties to indemnify and defend are universal in professional liability policies. Many times, in determining which insurance and carrier to select, health care providers look only at the limits offered and the premium required to obtain those limits in making their final decision. However, they may also want to consider some particulars about additional coverage, the scope of duties and benefits provided under the policy, the insurance company itself, and the manner in which the company handles professional liability claims. Serious problems can arise in each of these areas that can make a health care liability claim even worse than imagined.