The Hidden Costs of Relying on Employer Provided Insurance

Just as the true test of a good medical provider comes when you have a medical issue, your malpractice insurance policy isn’t ever tested unless you actually need it. Unfortunately, many providers make the mistake of waiting for an incident to occur to realize they’re underinsured. 

That’s because many clinicians mistakenly believe employer?provided malpractice coverage offers full protection. However, employer policies are structured to protect institutions first, not the individual clinician necessarily. “An employer’s policy is in the name of the business entity because the fiduciary duty of somebody who runs a business is to make sure the business sustains itself long term,” says William Sullivan, Executive Vice President of CM&F Group. 

Relying on an employer policy only carries hidden costs that can take a toll on your finances, professional reputation and even emotional well-being.

An additional independent policy is critical to filling coverage gaps.

Coverage gaps can derail claims

Employer?provided professional liability insurance prioritizes the institution’s interests and not the individual provider’s. This means coverage limits, defense control and exclusions can leave advanced practice providers (APPs) exposed. 

There are many ways this can leave you exposed. If a lawsuit arises, decisions such as whether to defend, settle, or contest are all made with the business’s interests in mind. 

There are many ways this can leave you without coverage. For example, if you work for a hospital and your judgment deviates from your employer’s internal protocols, they can decline coverage. “The business entity might say you didn’t follow their protocol, and even if you followed best practice, they could decline coverage,” says Sullivan.

A personal policy fills in this gap, putting you first and stepping in where institutional interests diverge from your own. Having your own policy with CM&F Group gives you first-dollar defense. “Even if you’re covered by your employer, we jump in the moment you’re subpoenaed and notified of a claim,” says Sullivan.

Unseen financial and professional risks

When your employer manages a lawsuit, you typically lose control over the defense strategy, such as choosing whether to settle or negotiating terms that affect your licensure. This is true even if you’re never found at fault. 

Plus, even if your employer covers the legal costs, some policies don’t cover licensure defense or personal financial consequences like temporary or long?term career disruption.

Sullivan has seen many clients make the mistake of thinking they don’t need legal defense in a licensure hearing in front of colleagues on a medical professionals board. “The people on the board are not your friends. They’re professionals protecting the safety of the community of their state,” he says.

Having a personal malpractice policy with licensure defense ensures you have someone on your side who can prep you for a board hearing. “If you get caught off guard because you didn’t have a proper defense, you’ll respond more emotionally rather than factually, which is where defense counsel helps prepare you for that,” says Sullivan.

Ensure you have tail coverage

Another overlooked risk of relying on employer coverage is what happens when old claims resurface. This is especially true if you eventually want to open your own practice and have risk from an old job where you’re no longer covered. 

“We’ve had providers come to us a year into starting their own practice, and then they notify us of a claim they weren’t even aware of from an incident that happened years ago at a previous job,” says Sullivan. 

For example, there’s a surge of COVID subpoenas popping up now, several years later.  Without tail coverage, providers are left vulnerable to liabilities for care delivered years earlier if they lacked personal coverage at the time. The following are two examples:

• Your former employer closes: In cases where a prior company becomes insolvent, you’re likely no longer covered by a policy you had at the time of working there. “You don’t want to be looking for proof of coverage years later from a company that’s closed,” says Sullivan.
• Your former employer is high risk: Another issue can occur if you worked for a company that faces significant lawsuits, like NuMale. They faced one of the largest malpractice verdicts in history, making anyone who worked for them at risk if they had only employer-provided coverage.

Why you also need an independent policy 

Coverage Area	Employer Policy	Individual Policy
Defense control	Employer?led	Your attorney represents only you
Tail coverage	Tied to the employer	Under the individual’s control
Coverage limits & exclusions	May be suboptimal	Adjustable to personal needs
Personal protection	More focused on the employer	Focused on individual risk mitigation
Portability between roles	Tied to employer	Travel or change jobs seamlessly

Relying solely on employer?provided malpractice coverage exposes you to hidden and potentially devastating risks, including legal control, financial exposure and emotional distress. Put simply, independent policies put you in the driver’s seat of your insurance coverage. You choose the limits, tailor the protection, and are the only party covered in case of a lawsuit.

A well?structured independent medical malpractice policy protects you where institutional policies may not.

 

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