Big hello to my nurse practitioner sisters and brothers! Today’s article is brief but important. Ed Kuhn, who is a licensed agent with Wellness Medical Protection Group, was kind enough to write 5 points that you seriously need to understand and consider when purchasing malpractice insurance or renewing a policy. It is absolutely CRITICAL that you have malpractice coverage that covers you for what you are doing. I have written 2 articles about malpractice before HERE and HERE. If you have not read those, I would advise you do so.
The last thing anyone needs is to be named in a claim and have malpractice insurance that DOES NOT cover them. It would be disastrous to your financial wellbeing. Therefore, you need to ensure what you are doing is covered! If you are integrating a new service, then you need to be sure that your malpractice carrier knows this. And ALWAYS correspond with your carrier via email. Never take an answer over the phone!
Alright, more from Ed:
Nurse Practitioners are evolving and so is their liability insurance coverage to match. The liability insurance market for your new practice is different than what you may have had in the past. These bullet points below summarize some of these key differences.
- Liability Insurance for your med spa/wellness practice is procedure driven coverage, not specialty driven. What the company is going to cover for you and the annual premiums are all determined by the procedures, treatments, and menu of services you offer and how often. We need to know your business plan and what it is that you are doing, and that is then what we look to specifically cover. The plan will be a profile of your practice and will provide an outline through the application process of what we need to cover specifically. We see primarily IV therapy, weight loss, and HRT as the main procedures listed, therefore we ensure you are covered for providing those services.
- This should be commercial insurance to cover your business entity (LLC, PLLC, Inc, etc.), not individual coverage. The business policy automatically covers the employees and Medical Director (where applicable). You will never see an individual’s name on a commercial malpractice policy, everyone is covered by definition. Only in cases where you want to cover a provider specifically for direct patient care, then the provider coverage is added by policy endorsement. Medical Directors are automatically covered under the policy – no need for them to have their own.
- All the insurance policies that cover the procedures are through specialty insurance companies, called “surplus lines insurance companies.” These are companies that are not licensed or “admitted” in your state, but eligible to provide insurance on liability risks the companies that are in your state won’t want to cover, such as: IV therapy, HRT, PRP, lasers, fat reduction, etc.. The rate or premium charged for a surplus lines policy is determined by the company. They don’t offer occurrence forms, discounts, or set rates. The underwriting is customized for each med spa/wellness practice because you are all doing different things, especially in cases where there is an integration of services offered like primary care, weight loss, IV therapy etc. that needs to be presented in detail on the application.
- The application process involves applying for coverage using an application that matches what you want to do. The application is a reflection of what we need to cover – legal name, location, employees, procedures, etc.. All the questions must be answered and should just reflect what your practice will look like on day 1. We need (Jan 2023) application(s), claims history in some cases, confirmation that consent forms are used, and that procedure training certificates are available (such as the ones awarded with the Elite NP courses). Telemedicine is seen the same way as in person in terms of risk also. Once the application is done, your submission is sent through a broker, who then identifies and sends it to all the eligible surplus lines insurance companies who cover your procedures. This will take 5-7 business days because you are a first-time insurance buyer. The broker then will send you the best policy that fits your needs.
- Policy forms – you will only be offered a “claims-made” policy form in the surplus lines market in order to cover your procedures. We wish there were occurrence policies to offer you, but there are no occurrence forms that will cover HRT and PRP for instance. There seems to be this thought out there that occurrence forms are better than claims made. The issue here is extended claims reporting capabilities once you cancel the policy. Under the occurrence form, your claim is covered as long as it occurred while the policy was in force. Claims made means you must report the claim while the policy is in force, and buy an “extended reporting” policy, or tail at the end in order to report a claim that would be reported after the policy is cancelled. The difference being pay now as you go along for the occurrence reporting or pay later in a lump sum for 1, 2, or 3 years tail. Over time with the two converge options, you could end up paying more for occurrence. A one-year tail policy for any niche procedure should be sufficient, and its optional, so you don’t have to buy it. On the other hand, with an occurrence policy, you will pre-pay for it whether you want it or not.
Thanks Ed! We just wanted to ensure everyone understood the process of obtaining a malpractice policy that is SPECIFICALLY written for what you do. I know there are insurance carriers out there such as CM&F group that provide you an individual occurrence policy through a simple online submission, but those types of policies are restricted to “what is in your scope” vs. being specifically written for what you are providing. You “should” be covered, so don’t freak out.
Personally, I like the piece of mind knowing that what I am doing is SPECIFICALLY covered, not some grey statement where coverage is assumed as long as you are doing something “within your scope.” Keep this in mind as you purchase malpractice policies. There is a reason why I chose Wellness Medical Protection Group to be our preferred vendor for malpractice: they write policies specific to niche practices and services.
I hope the above information helps you choose the correct policy for your niche practice. Having a solid malpractice policy will ensure your financial health for as long as you are a nurse practitioner, and more specifically a nurse practitioner entrepreneur!