7 Misconceptions to Learn About Entity Medical Malpractice Insurance

This blog will uncover seven common misconceptions about entity medical malpractice insurance.

18:06 20 December 2024

When it comes to entity medical malpractice insurance, many healthcare professionals are caught in a web of misunderstandings that can lead to costly mistakes. With so many myths circulating, it’s important to separate fact from fiction to ensure you're adequately protected. This blog will uncover seven common misconceptions about entity medical malpractice insurance. 

1. Same as Individual Coverage

While individual coverage protects a single healthcare provider, entity coverage is designed to protect the entire healthcare business or facility, such as a hospital or group practice. 

This kind of insurance protects not only the company but also its employees, which may include licensed medical professionals, registered nurses, and other staff members. 

Although there may be some overlap between the two policies, entity coverage is more comprehensive because it pertains to the organization as a whole. 

2. Only Covers Lawsuits

In point of fact, this coverage may also include other legal expenses, such as fees for legal defense, settlements, and judgments. Even if a claim doesn't lead to a lawsuit, insurance can cover investigation costs and other expenses related to potential claims. 

The purpose of this insurance is to protect healthcare organizations from a wide variety of legal risks, not just lawsuits, but also from other types of legal risks. 

3. Only Covers the Business, Not Its Healthcare Providers

Not only does entity medical malpractice insurance protect the company, but it also protects the healthcare providers it employs. It’s designed to protect the organization as a whole, but it can also provide coverage for individual healthcare professionals working within the entity. 

This includes protection against claims that may arise from the actions of doctors, nurses, or any other staff member. Some policies are structured to cover both the business and its employees, ensuring everyone is protected under the same plan.

4. Always Expensive

Despite the fact that costs can change depending on the size of the medical practice and the level of risk it poses, there are ways to keep costs under control. The cost of coverage is determined by a number of factors, including the location of the healthcare entity, the specialty it provides, and its previous claims history. 

Smaller practices or those with lower risk profiles may find more affordable options. Additionally, many insurers offer customizable plans, allowing businesses to choose the level of coverage they need. 

It’s important to shop around and compare options to find the best deal for your specific situation.

5. You Don’t Need Coverage if You Have a Risk Management Plan

A risk management plan can help prevent incidents, but it cannot protect your business from legal claims or lawsuits that may arise despite precautions. 

Malpractice insurance is essential because it covers the financial costs of claims that may still occur, even with a strong risk management strategy. A well-developed plan reduces risk but does not provide the necessary financial protection that insurance offers. 

6. Switching Providers Will Result in Gaps in Coverage

If you change insurers, it's important to ensure there’s no overlap or break in coverage between the old and new policies. Many insurance companies offer “prior acts” coverage, which ensures protection for claims that arise after the switch, even if the incident occurred before the policy change. 

To avoid gaps, work closely with your new insurer to make sure all potential risks are covered. Proper planning ensures that your entity maintains continuous protection, even when switching providers.

7. Provides Lifetime Coverage

Coverage typically lasts for the duration of the policy term, which is usually one year. Once the policy expires, it must be renewed to maintain protection. 

Additionally, the terms and conditions of the policy can change with each renewal based on factors like claims history or the type of coverage needed. It's important to review and update your coverage regularly to ensure it continues to meet the needs of your business.

Protect Healthcare Practices and Providers

In conclusion, protecting healthcare practices and providers is essential to ensure both the business and its individuals are shielded from potential legal and financial risks. By understanding the nuances of entity medical malpractice insurance and addressing common misconceptions, healthcare organizations can make more informed decisions and secure the right coverage.