The question “how much insurance is enough insurance” as it pertains to medical professional liability insurance is far more complicated than it used to be. Outside influences such as the legal climate, media exposure and efforts to lower healthcare expenditures are a few good reasons why healthcare professionals and facilities should periodically analyze insurance needs and a number of key factors which can impact those needs.
In Kansas, certain healthcare providers (physicians, hospitals, CRNAs, and others as defined by K.S.A. 40-3401) are required to carry basic coverage. This basic coverage provides $200,000 in coverage per claim, and $600,000 in coverage annual aggregate limits, and is available from insurance carriers who are authorized to write business in Kansas, risk retention groups, and qualified self-funded programs. Defined healthcare providers are also required to select a layer of coverage from the Health Care Stabilization Fund (HCSF) to supplement basic coverage. Together, these two layers of coverage make up the professional liability coverage for the majority of Kansas physicians and hospitals. In Missouri, there is no Health Care Stabilization Fund; therefore most healthcare professionals purchase $1M in limit from their insurance carrier.
When concerned with the possibility of facing a claim which could exceed the aforementioned coverage, it is common to consider the purchase of additional insurance, such as excess or umbrella coverage. Such coverage is provided by the purchase of an additional policy. The additional coverage only becomes payable after the required coverage is exhausted. Most companies sell excess coverage in $1,000,000 layers. Each layer will come with a distinct effective date, or when the policy is issued, and a retroactive date, referring to the earliest date that something may occur in order to trigger coverage. Keep in mind that additional insurance cannot be purchased to cover claims already in existence.
For physicians and other individual healthcare professionals, the decision to purchase additional coverage is a personal one. To assist in evaluating whether or not a need exists for additional coverage, please click here to view our Physician/Individual Additional Insurance Considerations.
For hospitals, their corporate culture and environment may play a significant role in deciding whether or not to purchase additional coverage. Additionally, public hospitals may wish to consider the impact of the Kansas Tort Claims Act. See, for instance, K.S.A. 75-6105. To assist hospitals in evaluating interest or need, please click here to access the Hospital Additional Insurance Considerations.
In summary, the best response we have for the question “how much insurance is enough insurance” is to recommend each individual/hospital periodically review the coverage in effect, the risks and risk tolerance through a method similar to the Assessments provided here, then make an informed decision.
Please feel free to contact the KAMMCO Underwriting department at 800.232.2259 if you have further questions.