Medical malpractice legal expense insurance is a product that waned in popularity during the present long soft market cycle. But as we all know, the insurance market is and remains cyclical. Many experts expect that the next hard market will arrive sooner rather later. Medical malpractice legal expense insurance is a product that can be a useful financial tool in several different ways. Medical malpractice insurance has two major components, the legal defense portion and the indemnity portion. The legal expense portion covers the legal fees, expert witnesses and related legal defense expenses. The indemnity portion covers the potential award to the injured patient.Medical malpractice legal expense insurance provides coverage solely for the legal defense part of the physician’s exposure, leaving the indemnity portion uninsured or self-insured. The most common use of this product is to provide coverage for the legal defense when a physician has decided not to insure his or her indemnity risk. This may be a step towards more coverage for a previously bare physician or a step down in insurance coverage for a practitioner deciding to no longer carry indemnity coverage.
Another practical use of medical malpractice legal expense insurance is when a physician is retiring or leaving the practice of medicine, if a physician is confident there were no incidents during their time of practice by desires some piece of mind, they most likely will find legal defense insurance a more affordable option than purchasing the tail on their previous medical malpractice policy.
For groups that are considering self insurance or captive insurance arrangements, medical malpractice legal defense insurance can be a useful tool in providing some insurance coverage, thus minimizing the risk to the self insurance pool or the captive insurer. Medical malpractice legal defense insurance is not for everyone but it is a tool to consider when evaluating how to control your overall cost of risk in these financially trying times.
