Occurrence or claims-made?
What kind of insurance is best?
By Louis Sportelli, DC

Few doctors would consider practicing without malpractice insurance. But selecting the right kind of insurance is important — not only in terms of amount of coverage, but also in terms of the type of coverage.

Two types of coverage are occurrence coverage and claims-made coverage.

Occurrence coverage protects you against claims for alleged incidents that occur while the policy is in effect. Even if the policy has expired or is canceled, the coverage protects you for that specific time period. This is important, because a patient may file a lawsuit months, or even years, after an incident took place.

Coverage is provided at the limits of liability, terms, and conditions in effect at the time of the alleged injury.

Claims-made insurance protects you against claims for alleged incidents that occur and are reported by you in writing during the policy period. If you cancel this policy, it’s recommended you purchase “tail coverage” to protect against claims for alleged incidents that took place, but weren’t reported while the policy was in effect.

Coverage is provided at the limits of liability, terms, and conditions in effect at the time the claim is reported.

As a standard, tail coverage may not be available if the claims-made policy cancels for non-payment of premium.

Both occurrence and claims-made policies provide the same insurance protection. When choosing between the two consider what’s best for you and your situation.

Here is a comparison of the two types of coverage:

OCCURRENCE POLICIES

• Cost. Costs are higher than claims-made policies during the initial years of coverage, but you do not need to purchase tail coverage when you cancel your policy.

• Convenience. Costs tend to be more stable, which can provide strength to a long-term financial plan. And, you do not need tail coverage if you stop practicing or retire.

• Flexibility. For chiropractors with career gaps (such as for family leave, travel, or disability) occurrence coverage can provide the flexibility of taking time off without the added expense of tail coverage.

You can also request an increase to your current policy limits at any time.

• Security. Occurrence coverage provides coverage for alleged incidents taking place when the policy was in effect — even if the incidents aren’t reported until later.

CLAIMS-MADE POLICIES

• Cost. Costs start out lower and are tiered to rise over three to five years. Total costs are generally lower than an occurrence policy during the first years of practice. However, after a claims-made policy matures — generally in five years — its cost will typically level off at a rate slightly below an occurrence policy rate.

• Convenience. You will need tail coverage if you stop practicing or retire. But if you’re covered by one malpractice insurer over the years without gaps, any inconvenience in acquiring tail coverage one time may be offset by cost savings received.

• Flexibility. With claims-made coverage, you determine the policy limits for prior years covered when you purchase tail coverage. You can request an increase to your policy limits — for coverage beginning at the start of the policy period through current levels — at any time.

• Security. For a claim to be covered this policy, the alleged injury must occur and be reported in writing between the retro date (start date) of the policy and within 60 days following the date of the policy’s cancellation.

By acquiring tail coverage when your policy cancels, you can protect yourself against claims for alleged incidents that took place while the policy was in effect.

Louis Sportelli, DC, is president of NCMIC Group, Inc., which offers an array of diversified insurance and financial services. For more information, call 800-769-2000, ext. 4163.

DISCLAIMER: The accompanying text is offered solely for general information and educational purposes. It is not offered as, nor does it constitute, legal advice or opinion. You should not act or rely upon this information without seeking the advice of an attorney.