Malpractice Insurance 101
The word “malpractice” refers to a deviation from the standard of care that leads to patient injury or death. Basically, it’s the word we use when something goes wrong.
What is malpractice insurance?
Malpractice insurance helps protect you if someone files a lawsuit against you. Lawsuits are a reality of practicing dentistry, but with the right policy, you can manage risk while providing the best care.
Why do I need malpractice insurance?
In most states, the law requires that dental professionals carry malpractice insurance. During dental school, you were likely insured through your university. After you graduate, you’ll need to get your own malpractice insurance.
Many dentists who haven’t had a lawsuit think it won’t happen to them, or that only “bad” dentists get sued. Unfortunately, that’s not the case. It is possible to be served with a frivolous lawsuit even if you did nothing wrong.
The average dental malpractice payout is about $109,863. And that’s just the payment to the plaintiff. Once you add in defense costs, which can be tens of thousands of dollars, it’s easy to see why you’d rather have your insurance carrier pay the bill instead of you.
How do you buy malpractice insurance?
An insurance carrier issues your policy and is responsible for providing your coverage.
You can buy your policy through an agent or broker, or directly from a carrier.
When you’re purchasing insurance through an agent or broker, they may offer you a set of quotes from various carriers that you can choose from. So, while agents can facilitate your policy purchase, carriers provide the actual coverage.
How you buy malpractice insurance varies depending on your situation. For example, a dentist with their own practice will purchase insurance differently than a dentist employed by a large group.
Understanding Your Policy
Once you understand a bit about malpractice insurance and how to buy it, you’re ready to start considering what kind of policy you need.
Policy Types: You (Should) Have Two Options
When it comes to malpractice insurance, you have two coverage options: Occurrence or Claims-made. If you’re choosing your own insurance, you’ll need to decide which type will offer you the best protection throughout your career and into retirement.
- Occurrence coverage protects you from the day you purchase the policy and beyond, even if you retire, take a leave of absence, or cancel the policy.
- Claims-made coverage only protects you during the year you have the policy, like health insurance. So if you choose Claims-made, you’ll need tail coverage for continued protection after you cancel the policy. (Keep reading for more on tail coverage.
Limits: Your Coverage in Dollars
The limits of your policy really matter, because they determine how much your insurance carrier may pay in the event of a claim. The policy limits are the maximum amount an insurer is willing to pay for claims filed against you.
Your policy limits are written as two numbers:
- The total amount your insurer will pay for each claim filed against you.
- The total amount your insurer will pay if you get multiple claims filed against you in one policy period.
Policy limits work differently depending on your coverage:
Claims-Made Policy Limits
How the limits work: For Claims-made coverage, your policy limits expire at the end of every year.
What that means for you: If you don’t renew your policy each year, you won’t be protected for any claims filed against you, even if the incident happened in the past when you did have coverage.
Occurrence Policy Limits
How the limits work: For Occurrence coverage, your policy limits never expire.
What that means for you: If someone files a claim against you, your Occurrence policy from the year of the incident will cover you. Each year you renew your policy, you have a new set of limits in place for future protection of that year.
How do your limits play out?
Over the course of a 35-year career, a general dentist will treat around 131,000 patients.4 That’s 143,000 opportunities for a malpractice claim.
With a Claims-made policy, only a single set of limits is available at any point to cover the dentist from claims that could arise from the patients they saw both in the current year, and every year prior.
But if the same dentist had purchased Occurrence coverage each year for the same 35-year period, they would have 35 separate sets of limits over the same time span — one to respond for each policy year.
Patient Compensation Funds
What is a Patient Compensation Fund, and how does a state-mandated cap on damages affect policy limits?
A number of states have established a Patient’s Compensation Fund (PCF), which is designed to increase availability and/or affordability of malpractice insurance. Of those states, Indiana and Louisiana have unique policy limit options for dentists participating in the PCF.
Are there any other states with limit requirements?
Yes, many other states require minimum limits of liability for dentists. In some states, minimum limits are not required, but maximum damages caps are set. Make sure to ask your agent or carrier if your state has specific requirements.
What limits do I need for my practice?
It’s important to know that, just like you, your practice can be named in a malpractice lawsuit. If you plan on owning a practice, you should consider two important entity coverage options: separate limits or shared limits.
- Separate Limits Coverage: If you own all or a portion of your practice, you may qualify for an entity malpractice insurance policy with separate limits. This allows defense costs and indemnity payments to be paid on behalf of your practice — separately from your individual policy limits.
- Shared Limits Coverage: If you have a solo corporation and have no employed or contracted dentists, then you may choose to share your individual policy limits with your practice. This means defense costs and indemnity payments will be paid on behalf of both you and your practice under one shared set of limits.
Key Takeaway:
There are a lot of factors to consider when choosing limits. Are you performing high-risk procedures? Does your state or county have a history of malpractice litigation? What kind of insurance does your employer have? It’s best to talk to your agent or a representative from your insurance carrier to make sure that your limits are adequately matched to your level of risk.
Understanding Tail Coverage
With a Claims-made policy, your protection ends at the end of the policy term. This means that if someone files a claim against you after you’ve retired or during a leave of absence, you will have no protection, even if you were covered when the incident happened.
For this reason, most people with Claims-made policies need to buy tail coverage to cover the “tail” of liability left behind them after their policy ends. Tail is not necessary for an Occurrence policy, since the coverage never expires.
Will my carrier give me tail coverage?
Many insurance companies offer free tail coverage, which could make a Claims-made policy less expensive than an Occurrence policy. If this seems too good to be true, that’s because it may be.
A lot of the time, insurers only provide tail coverage for free with these stipulations:
- The tail coverage will only be free once you fully retire
- You often need to be a certain age to retire and receive free tail coverage
- The tail coverage will only be free if you die or become disabled
Key Takeaway:
If you want to eliminate the complexities involving tail coverage, consider purchasing an Occurrence policy.
Common Circumstances that Require the Purchase of a Tail
Board Coverage
You will likely have coverage offered to you at no cost for your board exam. If this policy is not an Occurrence policy, you will need tail coverage after the policy’s termination (to cover any exposures during your board exam). Not having tail coverage means not being protected if a claim is filed after the policy period expires.
Residency
If you decide to return to school for a residency program, you will likely be covered by the university. If so, you could cancel any coverage you have for your current practice. However, if you are insured under a Claims-made policy, you will have to purchase tail coverage to cover any years spent in practice.
Leave of Absence
You may want to terminate coverage while taking a leave of absence from practice. If you have a Claims-made policy, it may require the purchase of tail coverage. Examples of a leave of absence include parental leave, poor health, a sabbatical and medical mission trips.
Relocation
If you move to a state where your insurance company does not offer coverage or where the cost of malpractice insurance is significantly lower than the original state, you may need to purchase tail coverage.
Mobility
An increasing number of new graduates are joining group practices. The policies provided are often Claims-made, and the average length of employment with these organizations is three years.5 You may be required to buy tail coverage when you leave the group, unless your new employer commits to pay for tail coverage in your employment contract or another insurance company covers your prior acts.
Non-Renewal
If your insurer does not renew your policy, you may need to purchase a tail policy to maintain coverage for all procedures performed during the Claims-made coverage.
Faculty
What if you leave private practice to work for a university? In order to ensure coverage for procedures performed during your time spent in private practice, you must purchase tail coverage if you were insured under a Claims-made policy
Consent to Settle
When you’re faced with a malpractice claim you usually have two options — settle (pay the demand) or go to trial. Depending on the circumstances, there are many reasons why you may want to take either path.
That’s why the consent provision in your malpractice insurance policy is so important. This is the part of your policy that decides who has control over settling a claim — you or your carrier.
Ask to see your malpractice policy’s consent provision firsthand to make sure there are no exceptions.
While some carriers advertise “full consent,” their policies may contain exceptions that actually take away your right to settle in different situations.
Common Exceptions To Consent To Settle
If any of the following are in your policy, you don’t have a pure consent to settle provision.
- Unreasonable. You have consent authority, unless the insurance company deems you unreasonable in withholding your consent.
- Unavailable or Cannot Be Located. You have consent authority unless the company cannot locate you or you are otherwise unavailable at the time of settlement or jury trial.
- Board Approval. You have consent authority as long as the company’s review panel or board agrees with you that your performance met the standard of care. If they disagree, the board assumes consent authority on your behalf.
- Binding Arbitration. You have consent authority unless the company disagrees, at which time they submit your refusal to consent to binding arbitration.
- No Longer Insured By the Company. You have consent authority unless you are no longer insured by the company at the time settlement or trial occurs.
- License Suspended. You have consent authority unless your professional license has been suspended, revoked or surrendered at any time during the claim process.
- Deceased or Incompetent. You have consent authority unless you are deceased or deemed incompetent.
Key Takeaway:
Make sure to check that your carrier really does have pure consent because being forced to settle a claim can really impact your reputation and career.
Choosing Your Malpractice Carrier
Now that you know what to look for in a policy, your next decision will be choosing an insurance carrier.
Your carrier is the company that actually underwrites your policy and pays out claims on your behalf.
Are all carriers virtually the same?
Definitely not! There are important differences between the top malpractice carriers. From years of experience to success in the courtroom to independent ratings, it’s important to compare your carrier choices. Here are three big differences between carriers to consider.
What is their financial strength?
Your insurance carrier should have the financial resources to protect you in the worst-case scenario. You can check a carrier’s financial strength rating through independent agencies.
Do they provide risk management resources?
Your insurance carrier shouldn’t just help you defend claims; they should help you avoid them. Make sure your carrier offers materials and advice for reducing risk, which will help you make your practice safer.
Are they experienced in claims defense?
Your carrier should have a record of strong malpractice litigation. You should look at their trial win rate, the number of claims they’ve managed since their founding, and how many claims they’ve closed without payment. All of these numbers should be high.
In addition, it does not cover business personal property i.e. dental equipment , furnishings. As construction approaches completion, and equipment deliveries are scheduled, you should speak with your insurance agent about obtaining a business owners policy which includes coverage for business personal property.
Financial Strength
A company’s financial strength is directly tied to your protection as an insured. Without ample financial resources, your insurance carrier won’t be able to pay out claims and offer you the strongest defense possible.
How can you tell if a carrier is financially strong?
Independent rating agencies like A.M. Best and Standard & Poor’s issue annual credit ratings that evaluate the financial stability of insurance carriers. The higher the rating, the more stability they have.
A carrier’s third-party rating is important because it indicates the level of financial resources they have to defend you.
How do you know if a carrier can pay out claims?
Fighting a lawsuit or claim can be expensive. One sign that your carrier has the financial capital to defend you is if they pay for defense costs outside of your limits.
That means all costs for your claim (lawyer’s fees, expert witnesses, etc.) will be paid for by the company and won’t drain your policy limits should you need them to settle or payout in the event of a plaintiff verdict.
A malpractice lawsuit can cost you more than just money. You could also lose:
- Good employees
- Long-term patients
- New market opportunities
- Highly qualified associates/partners
- Income potential
That’s why you need a carrier with the financial strength to defend you fiercely, without pinching pennies or cutting corners.
Risk Management Resources
As a dentist, you often wear many hats — both as a business owner and a healthcare provider. It can be hard to maintain all of your responsibilities while also managing your risk for malpractice claims. That’s why risk management tools are so important for you and your practice.
How can your carrier help with risk management? The ideal malpractice carrier will offer a variety of dental specific risk services that provide timely and meaningful support to you and your practice. Make sure that your carrier can offer you the following:
- Experienced dental risk consultants available online or over the phone
- Continuing Education and on-demand webinars
- Risk resources including consent forms, articles, and assessments
Key Takeaway:
Ask to see a carrier’s full breakdown of risk management services. This can be a huge value-add to your policy.
How Can You Use Risk Management?
Many times, dentists call their malpractice companies’ risk management teams when an area of concern presents itself. Here are a few scenarios in which a risk management team should be able to provide you with guidance:
Dealing With An Adverse Event While doing a routine filling, a portion of a burr breaks off and cannot be located. How should this be handled from a risk management standpoint?
Dental Records Management A dentist is running out of storage space and wants to dispose of dental records for some inactive patients. Can this be done, and if so, how should it be completed?
Child Custody and Treatment A dentist is treating an 8-year-old child of divorced parents for several caries. The mother has been compliant with the dentist’s instructions, including keeping all appointments. The father of the child has called the office and stated he does not want the child to receive any further dental treatment. May the dentist continue to treat the child?
Referral To a Specialist A general dentist has a patient in her fifties who has a non-vital tooth that requires endodontic treatment. The general dentist wants to refer the patient to an endodontist because of the complicated root structure, but she is insisting that he perform the procedure rather than making the referral. Should the general dentist perform the procedure?
Disgruntled Patient An elderly patient is dissatisfied with the appearance of a bridge constructed by the dentist, and several revisions have still not satisfied her. The dentist wants to refund her money and discharge her from the practice. How can this be accomplished?
Noncompliance With Recommendations A dentist has a patient who has worsening periodontal disease as a result of his poor oral hygiene and noncompliance with the dentist’s recommendations. The dentist wishes to discharge this patient from the practice even though he needs continuing care. How can this be accomplished without the potential of abandoning the patient?
Claims Defense
Do all insurance companies handle the defense of malpractice claims the same way?
The short answer is no. It is extremely important to select a malpractice insurance carrier that has expertise in malpractice litigation. The carrier should understand the venue, specific state laws, as well as clinical practice standards in your state.
The successful defense of malpractice lawsuits requires a claims team with:
- An understanding of the scope of malpractice as determined by professional societies and/or state licensure boards
- A grasp of technical clinical concepts
- Access to highly qualified experts
- The financial resources necessary to aid an aggressive defense
- Expert knowledge of the law
Did You Know?
Many claims made against dentists are actually based on situations where the dentist had the patient’s best interest in mind and did not deviate from the standard of care.
Meet MedPro Group
Allow us to introduce ourselves.
Once you understand a bit about malpractice insurance and what to look for in a carrier, you’re ready to go shopping. You’ll quickly find there are a lot of options out there, and they might seem pretty similar. But we’re the exception.
MedPro Group (the carrier behind this guide) has been the industry standout for decades. We’re proud to be “the only one” in a lot of different categories.
We’re the only one that’s been in business for over a century. The only one to insure one out of two graduating dentists. And the only one with the financial strength and reliability you need.
We know you’re looking for the one carrier that will be there for you, and we hope it’s us.
See how we support dentists like you every step of the way.
- Dental school We partner with ASDA to offer education and support for students during school—including free externship coverage.
- Residency Find your niche, with affordable moonlighting coverage and free risk resources.
- Starting your career Our $50 first-year policy is just one of the reasons one out of two new dentists choose us.
- Throughout Your Career No matter what comes your way, practice confidently with our risk and claims support.
- Retirement Retire from practice knowing your career is covered.
More Reasons You Should Feel Good About Us.
Financial Strength
MedPro has 125+ years of experience and the highest financial strength rating in the industry (A++ by A.M. Best). As a Berkshire Hathaway company, you can rest assured that we’ll be ready and able to protect you and your colleagues for the rest of your careers.
Flexibility
We offer coverage nationwide, allowing you to move anywhere in the U.S. without interrupting your coverage. This gives you the flexibility to have the strongest coverage no matter where your career takes you
Pure Consent to Settle
If a claim goes to trial, you’ll have the final say regarding accepting settlement. After all, it’s your career and reputation. Your insurance company shouldn’t make that choice for you.
Claims Defense
We have an unmatched claims record and use only the best local defense counsel. Rest easy knowing that we win 95% of dental claims that go to trial.
Risk Resources
We don’t just defend claims, we actively work to prevent them. With a wide pool of dental risk resources at your fingertips, you and your practice will have daily support against malpractice risk.
Price
We leverage our vast underwriting and actuarial expertise to appropriately assess risk and provide you with the best price possible as you start your career—including a $50 first-year policy.
Led by Your Peers: Your Dedicated Dental Advisory Board
MedPro is committed to staying ahead of the curve when it comes to current trends and new developments in dentistry.
As dentistry evolves, it is our job to understand the impact on our customers. To that end, we assembled a Dental Advisory Board comprised of leaders throughout the spectrum of the dental industry.
Together, MedPro and our Advisory Board work to ensure that the products and services we offer continue to meet the needs of today’s dentists.
Let's Put it All Together
If you were an American Student Dental Association (ASDA) member during dental school, your first policy with MedPro could cost as little as $50!
Connect with Treloar & Heisel to request a quote and discover why more new dentists choose MedPro Group for their malpractice insurance than any other carrier.
