Written by Stephen Lim, Lic# 0M66738
When searching and shopping for Medical Malpractice Insurance, there are different types of Insurance Companies styles, say different ways they form, but the outcome is comparably the same, to defend and indemnify providing insurance. We've listed out some of the different types of carriers along with a brief synopsis of each type.
If you would like information, chat with an agent below, or if you've caught us after hours, send us a message, and we will respond to your questions.
An Admitted Medical Malpractice Insurance Company
Admitted Medical Malpractice Insurance Companies are registered and domiciled in the State they are providing the insurance for, which means their rates must be registered and approved with the State of California before selling policies at that price point.
They are backed by the State Guarantee Fund in case the company goes bankrupt, and the State will support the insolvency with their money, so the insureds don't lose out or go into receivership.
They typically always provide the best coverage - Defense outside the limits, First dollar defense (coverage for any defense costs from dollar $1), zero deductible, full consent to settle (if the insurance company wants to Settle, you decide whether or not to continue to fight with no repercussions, besides the limits of your insurance).
Typically provides coverage for general healthcare practices, risks that can be calculated easily and generally. ie, family practice physicians, general surgeons, & standard healthcare practices.
Often provide Death, Disability & Retirement tail in case of any of these situations, the insured would receive free tail coverage, typically after a vested period of being with the same insurance carrier.
A Non-Admitted Medical Malpractice Insurance Company
Non-Admitted Medical Malpractice Insurance Companies are not domiciled in the State they are selling insurance, but registered in another state and have the authority to conduct business in other States.
They are not backed by the State Guarantee Fund in case of insolvency(bankruptcy); however, due to the size of these non-admitted insurance companies, we only work with ones with the highest financial stability.
This is a typical marketplace for Healthcare providers with: Claims, Healthcare risks that are not mainstream, Healthcare risks out of the scope of your designation, any other risk that an admitted carriers will not provide coverage for the Healthcare Professional.
Typically the coverage provided is their "base package". Base packages are not comparable to an admitted carrier offering and are contingent on underwriting. They usually offer clauses and further restrictions to the coverage provided for Medical Malpractice Insurance.
California Attending Physicians requests all non-admitted quotes, within reasonable limits, to include the following: Defense outside the limits of indemnity, First dollar defense (coverage for any defense costs from dollar $1), zero deductible, full consent to settle (if the insurance company wants to Settle, you decide whether or not to continue to fight with no repercussions, besides the limits of your insurance). Most of these coverages are not standard on a non-admitted carrier.
Access to these carriers can typically only be done through a broker or managing general agent.
Taxes and fees are charged on premiums for Non-Admitted Insurance Companies, which go to the State that you are purchasing the insurance for.
SL2 Due diligence requirement
We, as an agency, have a requirement to provide you an admitted carrier option first and foremost and cannot provide you a non-admitted carrier quote if you have current offers from an admitted carrier. Basically, the State we are servicing wants you to go with the best COVERAGE first.
However, if, for any reason, an admitted carrier cannot provide the requirements or coverage you requested, you have the ability to purchase a non-admitted carrier policy even currently admitted carrier offers.
Sometimes, the Non-Admitted carriers quotes will be lower, but if the admitted carriers offering provides everything you need, you MUST go with the admitted carrier.
Mutual Protective Trust Companies Providing Medical Malpractice Coverage
They are not an insurance company, but a financial trust company. They provide the same level of coverage, but they are a physician-owned and operated securities company that invests the money you put in to offer you additional benefits along with free tail coverage and reimbursement of the Initial Trust Deposit after ten years of being with the company.
To include any medical director coverage (future planning), you must be at least 51% owner of the organization, you will be doing any medical directorship. The admitted and some non-admitted carriers offer medical director coverage included within your policy.
Medical Malpractice Risk Retention Groups
A Risk Retention Group is a liability insurance company that assumes and spreads all, or a portion of, the liability exposure of its group members.
Typically the cheapest premiums you can find for coverage for most types of risk with specialty risk-retention groups.
Risk-retention groups are treated differently from traditional insurance companies. They are exempt from having to obtain a state license in every State in which they operate, and also are exempt from state laws that regulate insurance. For example, a risk retention group is exempt from having to contribute to state guaranty funds, which can lower premium costs but can also increase the possibility that policyholders will not have access to state funds in the event of group failure. All policies issued by a risk retention group are federally required to include a warning indicating that the policy is not regulated the same as regular policies.
Risk-retention groups are mutual companies, meaning that they are owned by the members of the group, and typically dividends are returned back at a certain period of time vested.
When searching for Medical Malpractice Insurance, it is essential to know what type of Insurance Company you are going into a contractual agreement with. Understanding how each company operates is domiciled, directly impacts your coverage.
