Ed Kuhn, a licensed agent with Wellness Medical Protection Group, provides the Elite NP community with some advice to consider when purchasing malpractice insurance or renewing a policy. It is absolutely critical for NPs to have a malpractice insurance policy that protects the full scope of their practice. Those who are in need of further education on malpractice insurance should read Elite NP’s guide to understanding your policy, and our breakdown of the way plans work.

Malpractice insurance basics

In the event of a malpractice suit, the worst case for a medical professional is finding out their malpractice insurance does not cover them. This can be disastrous for your financial well-being, as well as the future of your practice. Therefore, it’s always important to ensure that the care you are providing is covered under your current policy. If you are integrating a new service, you need to be sure that your malpractice carrier knows this. It is also smart to always correspond with your carrier via email. Never take an answer over the phone. All interactions and decisions should be recorded in writing.

Malpractice, decoded

The NP field is evolving, and so is the scope of liability coverage. If you have recently started or expanded your business, your new policy may be different than what you may have had in the past. Here are some key distinctions.

Med spa/wellness insurance

Liability Insurance for your med spa/wellness practice is procedure driven coverage, not specialty driven. Coverage specifics and annual premiums are all determined by your practice’s procedures, treatments, and how often you provide them. Carriers need to know your business plan, your goals, and future trajectory—this is how we decide what to specifically cover.

The plan will be created according to an overview of your practice, and the plan member will provide an outline through the application process of what we need to cover specifically. Many carriers primarily see IV therapy, weight loss, and HRT as the main procedures listed, therefore we ensure you are covered for providing those services.

Covering your business entity

You should have commercial insurance to cover your business entity (LLC, PLLC, Inc, etc.), not individual coverage. A business policy automatically covers all employees and medical director (where applicable). You will never see an individual’s name on a commercial malpractice policy, everyone is covered by definition. In cases where you would like to cover a provider specifically for direct patient care, the individual will be added by policy endorsement. medical directors are automatically covered under the policy. There is no need for them to have their own.

Malpractice insurance coverage for procedures

All the insurance policies that cover procedures are through specialty insurance companies, called “surplus lines insurance companies.” These are companies that are not licensed or “admitted” in your state, but are eligible to provide insurance on liability risks the companies in your state won’t want to cover. Examples: 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. The scope of your practice needs to be fully presented in detail on the application.

Best practices for malpractice insurance applications

The malpractice insurance application process involves applying for coverage using an application that matches what you want to do. This application is a reflection of what we need to cover—your legal name, location, employees, procedures, etc. All required questions must be answered and should reflect what your practice will look like on the day the policy kicks in. For example, we may need application documents, claims history (in some cases), confirmation that consent forms are used, and verification that procedure training certificates are available (such as the ones awarded with the Elite NP courses).

In terms of risk, telemedicine is viewed the same way as an in-person practice. Once the application is complete, your submission is sent through a broker, who then identifies and sends it to all eligible surplus lines insurance companies who cover your procedures. This will typically take five to seven business days if you are a first-time insurance buyer. The broker then will send you the best policy that fits your needs.

Malpractice insurance: ‘claims-made’ vs. ‘occurrence’ plans.

A ‘claims-made’ insurance policy covers incidents that happen and are reported during the coverage period. ‘Occurrence’ policies cover incidents that happen during the policy period, regardless of when the claim is reported. In the surplus lines insurance market, you will only be offered claims-made policies. There are no occurrence forms that will cover HRT and PRP, for instance.

There is a popular but inaccurate belief that occurrence forms are better than claims-made. However, many people don’t realize that extended claims reporting capabilities are extremely important, especially once you cancel the policy. Under occurrence insurance, your claim is covered as long as it occurred while the policy was active. With claims-made policies, you must report the claim while the policy is active, and buy an “extended reporting” policy in order to a report a claim any time after the policy is cancelled.

The difference boils down to ‘pay now or pay later’. Over time, you may end up paying more for occurrence-based insurance. A one-year tail policy for any niche procedure should be sufficient, and is optional, so you don’t have to buy it if you truly believe you don’t need it. On the other hand, with an occurrence policy, you will pre-pay for it whether you want it or not.

Elite NP is proud to feature Wellness Medical Protection Group on our official preferred vendor network. Their services are most conducive to medical groups providing niche practices and services, so it can be a smart choice to consult with their representatives before choosing a plan. To become an expert on insurance and asset protection, consider taking our comprehensive Asset Protection Course!