My Malpractice Quandry - please help!

TheCommuter, BSN, RN · Feb 22, 2008

NSO charges more expensive premiums for nursing malpractice insurance in Texas because they have had to pay out millions of dollars in claims arising from lawsuits within the past 8 years. Unfortunately, you and I live in a state that is one of the most litigious in the nation regarding malpractice suits.

My conjecture is that the other company is new to the Texas professional Liability Insurance market, and has not yet been struck by any onslaught of claims. Hence, they can keep their premiums reasonably priced and offer more coverage since they have not paid out any expensive claims.

Nurse_FF_EMT · Feb 23, 2008

You have to look at the fine print for both coverage, without seeing the exact terms I would guess the reason for the difference is the following:

There are two main types of malpractice insurance, I don't know the exact terms for both, but I will try to explain best I can:

The 1st type of malpractice Insurance is a "Claims-Made" policy, which is what CM&F offers:

This type of policy protects you from a lawsuit that is filed against you only while you have the policy. If you open a policy today, and you get sued because of a mistake you made 10 years ago, you are covered. The minute you drop the policy, you are no longer covered against any type of suit. That means that if you pay your insurance company for 15 years, and then retire and cancel your policy, and 5 years later you get served with court papers at the beach in Florida, you are on your own. Once you get a Claims-Made Policy, you really need to keep it active for the rest of your life if you want protection. The only good point of this policy is that is retroactive and covers events that you can get sued for prior to having the policy. They are cheaper because many people let their policy lapse, and thus loose protection if they get sued. This results in lower payouts from this policy type.

The 2nd type is a "Occurrence" Policy, which is what NSO offers:

This type of policy protects you if you get sued because of an incident that "occurred" while the policy was in effect, even if you don't have a policy with that company anymore. If I have a policy in effect for the year 2007, and then let my coverage expire, then I am still protected for the year 2007. If 20 years later, someone sues me because of something that happened while the policy was in effect, then the insurance company covers me. If I am only a nurse for 10 years before I get burned out and become a real-estate agent, I only have to have Liability Insurance for 10 years if I have an occurrence policy. Once I don't perform nursing anymore, I can let the insurance lapse, but still be protected. This type of policy is more expensive, because once they cover you for a certain period, they are covering you forever for that period. The drawback is that this policy is not retroactive.

A good example is this:

If you work in OB/Delivery for 1 year (lots of lawsuits I hear) you can either spend 99/year to get a claims made policy to cover you for hoverer long you want to spend the money to make you feel save. If your state has a 7 year limit on malpractice suits that would mean 8 years of 99/year to not get served with papers from your one year in OB. (=$800)

If you have an "occurrence" policy for your one year in OB you only have to pay the $232 for the one year you are in OB. Then you are always protected against a claim that was made because of something you did during that one year.

PMHNP10 · Feb 23, 2008

You have to look at the fine print for both coverage

This is absolutely correct. As I always say...the large print tells you what the policy is giving you; the small print tells you what the policy is taking away.

The 1st type of malpractice Insurance is a "Claims-Made" policy, which is what CM&F offers:
This type of policy protects you from a lawsuit that is filed against you only while you have the policy. If you open a policy today, and you get sued because of a mistake you made 10 years ago, you are covered.

These might be the terms of the policy that company provides, but strictly speaking, the claims-made policy covers you while you have the policy for something you get sued for while holding that policy. In other words, if you have a policy for 2007, you are only covered for events that occur during that year if you get sued that year. If you get sued in 2009 and you haven't continued to renew your policy nor purchase a tail, you are not covered. To be covered for something you did prior to holding that policy (e.g., 2003), you must purchase a retroactive tail, or more appropriately, a nose...and these are quite costly as one might imagine because you are asking a company to insure you for "X" years of uninsured practice prior to getting a policy.

The 2nd type is a "Occurrence" Policy, which is what NSO offers:
This type of policy protects you if you get sued because of an incident that "occurred" while the policy was in effect, even if you don't have a policy with that company anymore. If I have a policy in effect for the year 2007, and then let my coverage expire, then I am still protected for the year 2007. If 20 years later, someone sues me because of something that happened while the policy was in effect, then the insurance company covers me. If I am only a nurse for 10 years before I get burned out and become a real-estate agent, I only have to have liability insurance for 10 years if I have an occurrence policy. Once I don't perform nursing anymore, I can let the insurance lapse, but still be protected. This type of policy is more expensive, because once they cover you for a certain period, they are covering you forever for that period. The drawback is that this policy is not retroactive.

Correct, except that you can purchase a nose and cover your past, although I do not know if NSO offers noses. Also, as I mentioned above, you can purchase a claims made policy, add a tail if you quit nursing and it becomes an occurrence policy.

To the OP: When comparing policies, look for things about consent to settle, assuming obligation, primary or 2ndary policies, etc. If you don't know what I'm talking about, I can elaborate, but I didn't want to make this post too long

Also, find out the financial rating of CM&F. I know the most recent rating of NSO was A (excellent). In general you do not want to purchase insurance from a carrier rated below a B+.

CrunchRN, ADN, RN · Feb 25, 2008

Thanks so much for that information. I am almost temted to bag it since I am in a low risk career.

It is funny that even though they changed the tort laws or whatever here several years ago which made it much harder to sue and really decreased the litigation, NSO is still applying the higher rate.

Thanks again all of you.

medsurgrnco, BSN, RN · Feb 25, 2008

I recently spoke with a nursing attorney, who strongly advised that all nurses carry private Liability Insurance.

sharlynn · Feb 27, 2008

I'm in Arkansas and I just renewed NSO for $89! Wow, what a bargain!

TheCommuter, BSN, RN · Feb 27, 2008

I'm in Arkansas and I just renewed NSO for $89! Wow, what a bargain!

Then again, I'm sure that Arkansas is a less litigious place for nursing practice than Texas, which is the state where the OP and I work. Therefore, you pay significantly less for your NSO insurance and receive substantially more coverage (I conjecture you have at least $1 million worth of coverage). I pay $232 yearly for only $300,000 in coverage because I work in such a high-risk state for malpractice lawsuits.

CrunchRN, ADN, RN · Feb 27, 2008

Commuter is so right.

The only crazy thing is that with the tort law reform pain and suffering here is capped at $250k now. So to still make us pay so much for so little coverage sucks.

DutchgirlRN, ASN, RN · Feb 27, 2008

Need some advice please:
I am still confused about whether malpractice insurance is good or bad to have after reviewing the many discussions, but I am thinking I will get some.

I'm not convinced that I need it yet $100 a year is well worth the piece of mind.