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Malpractice insurance has a basic purpose: to cover the costs related to malpractice claims. These claims are made when a patient begins legal action against the doctor, opening an investigation to doctor practices, treatments and actions regarding the patient. Malpractice is usually any deviation from generally accepted regulations and professional conduct, especially if it leads to harm to the patient. While malpractice suits can generate in many different ways, when it comes to insurance coverage the vital part is the claim itself. Insurance will cover legal costs and damages that the doctor may face, but it depends on when the claim was filed.
Occurrence malpractice insurance covers any malpractice claims as long as they involve events that occurred while the practice was active. This means that a practitioner can switch insurance companies, but the malpractice claim will still be covered by the old policy even though it has ended --- as long as the events took place while the old policy was active. The legal process of investigating the claim has no bearing on what the insurance will cover. These policy
were once common, but are now rare and largely replaced by claims made policies.
Claims Made Policies
Claims made policies cover malpractice issues, but only when the claim itself is made. This means that the events that lead to the malpractice claim can occur at any time in the past: the key is when the claim is legally filed and the court acts upon it. This alerts the insurance company, which will then start providing coverage as long as the policy is still in effect.
Claims made policies are generally more difficult for physicians, since there is no correlations between the malpractice events and the claim. Many claims are made years after the events that they deal with. In this time the physician may have left the practice or switched to a different organization with new insurance. Since claims made insurance only takes effect when the claim is filed, the new insurance (or lack of insurance) may not cover the malpractice at all. This is why some physicians choose to purchase tail coverage, which protects physicians in case they change jobs or have their coverage terminated.