Do you need to maintain your malpractice insurance after your license is inactive?

RiskManager · Sep 15, 2016

Speaking as a Washington state risk manager, the answer is no, you don't need to keep your policy active for this reason. I posted on this very topic in a related thread last week:

#24 2

Sep 7 by RiskManager

Quote from DeeAngel

Keep in mind you must always keep your malpractice insurance in force even when you are no longer working as a nurse. You need to keep yourself insured in keeping with the statute of limitations for lawsuits in your state. I know I have to keep mine in force in my state for 10 years, despite not even working as a nurse for the last 3 years. Malpractice insurance is not something to skimp on.

I am sorry, but this too, is incorrect. First off, of course, you will in all likelihood be covered by your employer's insurance, even for a claim that occurred years ago and after you quit there. In terms of an individual policy, you first need to determine if your individual policy is 'occurrence' or 'claims made'. The actual policy will say on it if it is occurrence or claims made. If you have an 'occurrence' policy, you are covered for any claims that occurred while the policy was in force. You are still covered for any claims that are reported even after the policy is cancelled. A 'claims made' policy covers you for any claims that occurred and were reported while the policy was in force. If you want the claims made coverage to cover any claims that occurred while the policy was in force but were not reported until after the policy was cancelled, you have to purchase an 'extended reporting endorsement', or 'tail coverage'. The combination of a claims made policy plus tail coverage turns it into an occurrence policy. Tail coverage generally costs between 150-200% of your last annual premium. Most nursing policies are 'occurrence' while most physician policies are 'claims made'.

What this means is that depending on which type of policy you have, you don't need to keep it in force after you have retired or otherwise quit providing nursing services. If you had an occurrence policy, you are covered for anything that occurred while the policy was in force regardless of when the claim is reported. If you had a claims made policy with tail coverage, you are covered for anything that occurred while the policy was in force regardless of when the claim is reported. This applies even after the policy is cancelled.

You may want to continue to pay for an individual policy even after you retire or are otherwise not providing nursing services because you want the other additional coverages, but paying for it so that you are covered for a potential claim occurring years ago should not be a reason. That is already built into the policy.

Let me emphasize however, that if you have a 'claims made' policy and do not buy the tail coverage, if a claim is reported after the policy is cancelled, you will have no coverage for that claim. I run into this on occasion with physicians who cheaped out and did not buy the tail coverage. A claim came up years later that was not reported while the policy was in force, and there is no tail coverage, so the insurance company declines to cover the claim.

Let me know if you have any questions, or you can call the agency who sold you the policy to confirm this.

Starwarsstars · Sep 15, 2016

Thank you for your reply. I'm not sure what kind of coverage I had, so I would need to go look at the paperwork. I know there was a small period of time at the beginning of my nursing career that I did not have individual coverage. In the off chance I got sued, what would be the worst that could happen since I no longer want my license? Could I lose personal assets?

RiskManager · Sep 16, 2016

https://allnurses.com/general-nursing-discussion/one-healthcare-risk-999441.html

Read my article above for some context. The chances that you would ever be in a typical malpractice claim that is not covered by the employer's insurance is infinitesimal. The chance of you therefore having to invoke your own personal policy for a malpractice claim is next to nil. So from that standpoint, I would not spend a second worrying about a claim from back when you were practicing.

Of note, I do malpractice claims defense for a living and out of the scores of nursing malpractice claims I have handled for my nursing employees or insureds, every one of them was covered by the healthcare entity's insurance. No one has ever used their personal policy for a malpractice claim. Some of them have used the personal policy for a licensure defense action when NCQAC filed an actual complaint against their license, but that too, is a very small number. Relatively few of my employees or insureds buy their own policy.

Starwarsstars · Sep 16, 2016

Thank you so much for your reply and expertise. It has helped so much!

beckster · Nov 30, 2016

I have always read employers will seek to prove nurses did not follow policy, thus relieving the employer of responsibility. Is this untrue?