According to Guy C. Feist, managing partner at Fifth Avenue Agency, the policy limit on your medical malpractice insurance policy is the coverage amount for a given policy period. Liability coverage is usually indicated as “per claim” and “aggregate.” These numbers may be displayed as, for example, $1,000,000 per claim/$3,000,000 aggregate or shown as $1,000,000/$3,000,000.
This means that the per-claim amount ($1,000,000) is the total amount the carrier will pay for each claim against the insured. The aggregate amount ($3,000,000) is the total amount a carrier will pay during the policy period.
Sample Medical Malpractice Claim Scenario
Suppose a claim arises against the insured with an indemnity payment of $500,000 to the plaintiff. In that case, the carrier pays $500,000 for the claim, and the aggregate policy limit ($3,000,000) will be reduced to $2,500,000 for future claims that may arise during the term.
If another claim comes in during the same policy term with an indemnity payment of $1,500,000 to the plaintiff, the policy will pay only $1,000,000 to the plaintiff, maxing out the “per claim” limit of $1,000,000. The policy’s remaining aggregate limit is then lowered to $1,500,000 ($2,500,000 – $1,000,000) for future claims that might arise during the policy term.
Do you have enough medical malpractice insurance coverage?
It’s important to note that indemnity payments (the amount paid to a plaintiff) are not the only expenses associated with a claim. Here are other “legal” costs as well. These legal expenses can increase, especially if the suit goes to trial.
Some policies include legal cost coverage “inside the limits.” In this case, the legal expenses would reduce the policy limits and indemnity payment, leaving less money to pay out on any claim. If legal costs are “outside the limits,” the legal expenses won’t impact the limit, and more money will be available to make indemnity payments to a plaintiff.
Knowing your medical malpractice coverage limits is important. If anything occurs, it’s better to be prepared.
More information about Fifth Avenue Agency
Fifth Avenue Agency specializes in MPLI and medical malpractice insurance, serving thousands of providers nationwide. It is part of the Fifth Avenue Healthcare Services family. Sister companies include 5ACVO (credentialing and primary source verification specialists) and Primoris Credentialing Network (credentialing and provider enrollment specialists with 54+ health plan and network provider enrollment options).
Fifth Avenue Agency initially published this article here. For information on Fifth Avenue Agency, please visit FifthAvenueAgency.com or Contact Us.
