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What Is Supplemental Insurance?

White hand putting a wooden block with a cross on top of a pyramid of wooden blocks with different medical-related icons on them.

Supplemental malpractice insurance — sometimes referred to as secondary insurance or an individual policy — is a policy you buy yourself to boost and complement coverage you might already get from your employer. You could call it your “extra policy.”

So basically, you would have insurance coverage from your employer and your own policy.. And if you were named in a claim, the two insurance carriers would coordinate a defense and settlement strategy.

Anyone who takes vitamins knows how useful “supplements” can be. Vitamins enhance a daily diet, improving the amount of nutrients you get each day. And that’s exactly what a supplemental insurance policy would do to your employer coverage — enhance it.

So why would an employed healthcare professional buy a supplemental policy? A lot of healthcare professionals who have medical malpractice insurance from their employers also buy “their own,” “extra,” or “individual” policy (as we hear them refer to it). We’ll explain why.

But first, hear from some of them:

Real Healthcare Professionals Share Why They Purchased Supplemental Insurance

“I bought extra malpractice insurance due to the reassuring feeling that I have when I am protected. I honestly hope to never be able to have the need to use it.” — Juan S., NP

“I purchased malpractice insurance due to the fact that I can never tell when an employer would separate from a suit and leave it with me.” — Michael J., FNP

“I bought malpractice insurance because I have heard about situations that brought good nurses before the [Licensing] Board. And I have also heard stories of hospice nurses getting sued by family members because the patient died of unforeseen side effects or not following nurse instructions.” — Michelle P., RN, Hospice

Benefits of Supplemental Malpractice Insurance

Here are five reasons why you might consider getting malpractice insurance, even if you’re already covered by your employer’s malpractice policy:

1. To Avoid Conflicts of Interest

Say you're employed by a hospital, and both you and the hospital are named in a lawsuit. Even though you’re covered under your employer insurance policy, it’s possible that the hospital's defense might not align with your defense. Having your own policy would help ensure you are assigned your own attorney and defended separately.

2. To Cover You for Work Done Outside the Scope of Your Employer’s Policy

Your employer’s malpractice policy might have strict limitations on when it will cover you (e.g., only when you’re working on-site at your employer’s location). If you moonlight as an independent contractor or perform work outside your specific job description — even if it’s volunteer work — your employer’s insurance carrier might not defend you in the event of a lawsuit.

3. To Avoid Gaps in Coverage

If you maintain continuous individual malpractice coverage, you can have more peace of mind when you change jobs because your individual policy will cover you during any gap in employment.

4. To Be Covered for Board Actions typically not Included in Your Employer’s Policy

Your employer chooses the malpractice insurance policy, not you. So if you want certain things included, such as coverage for incidents that may give rise to a to action against you by a licensing board, you’ll need to make sure it’s in your policy.

5. To Access More Coverage

Malpractice insurance policies have caps on how much the carrier will pay for a settlement also known as limits of liability. If your employer-provided coverage runs out of limits of liability, you may have to pay any excess settlement amounts out of pocket. If you have your own supplemental policy, however, that excess could be absorbed by your policy’s limits instead. That’s why Kelly Hamer, a malpractice attorney in Florida, advises healthcare clients to buy additional professional liability insurance. She feels it provides more of a financial cushion to fight claims.

Summary of Supplemental Malpractice Insurance Benefits

Here’s a quicker summary of the benefits customers feel when having a supplemental medical malpractice insurance policy:

  • Legal defense for licensing board actions (employer policies often do not cover these)
  • Extra funds (helpful if many members of the team are named in the same suit as you)
  • Sense of security that you’ll have a full team on your side — especially if your POV is different from your employer’s. Your claims representative should walk you through what to expect, and quickly respond to any questions
  • Personal legal counsel (your own policy means you are the main point of contact with your defense team)
  • Peace of mind deciding whether or not you settle (employer policies might be more likely to force your hand)
  • Extra confidence that someone has your back (mistakes happen, and so do false claims. Either way, it’s nice to know exactly who you’ll call when this happens.)

(Read one real story of a nurse who was sued for a mistake and fought back citing long shifts and lack of rest.)

What Should a Malpractice Insurance Policy Include?

Ideally, your policy would include all of the following expenses and coverages. When doing your research, look for how the insurance provider handles each of these key areas (learn more about each one here):

  • Adequate limits to be applied toward settlements if needed
  • Hire and pay defense counsel to protect your interest
  • Court fees
  • Expert witness assistance
  • Consent to settle
  • Good Samaritan coverage
  • Worldwide coverage
  • Portable coverage (flexible)
  • HIPAA violations defense
  • Licensing board protection defense
  • Expert defense/counsel/guidance during a peer review committee
  • Wage loss/deposition expenses and covering your costs for attending a trial if you are named in a suit
  • Sexual misconduct allegations (defense coverage)

How to Choose the Right Supplemental Malpractice Insurance company

Besides cost and liability limits, there are a few other things you should consider when comparing carriers and policies. These include:

The claims process

Think of it this way: you're buying insurance to protect you from medical negligence or malpractice claims. And you want to feel confident that your insurance company was really going to handle it (and not suddenly show you a bunch of fine print you didn’t read and leave you stranded). Which means, you want the company known for a great claims staff and service. Questions to ask include, "Who handles claims at the organization?", "What’s the company’s reputation for helping you during the claim?" (Do they say “CLAIMS IS OUR PRODUCT(R)” the way we do here at Berkshire Hathaway Specialty Insurance?!)

Legal defense

How does the carrier hire and assign its lawyers? Insurance companies generally have access to an independent panel of defense lawyers they like to use. You should consider using companies that have claims departments that specialize in Medical Malpractice cases.

Customer service

If you are actually working with the customer service team when buying the policy, it might give you a great sense of what the whole company is like. Do the product specialists seem engaged and helpful? Are they licensed and knowledgeable on the product? Do they seem to be more focused on the sale or educating you? For example, Berxi product specialists focus on customer support and will answer questions and activate your policies, but they do not work on commission. This is important because their goal is to make customers more informed and help them better understand what they are buying and how they are covered, and not their personal bottom line.

Limits of liability

This is your amount of coverage, per incident and per year. Something to consider is whether defense costs are included in that maximum amount (called “inside the limits”) — in which case, whatever the insurance company spends to defend you will reduce what’s left over for a settlement or payout. Also, make sure you’re not paying for more limits than you really need. Because you’re paying for that surplus, annually.

Financial stability of the insurer

While it could be very possible an insurer doesn’t have enough money to pay a claim, the more likely scenario is your insurer has unstable financials, which makes paying claims a hassle — for you. How can you check a company’s financials? Look for AM Best ratings, which are the industry benchmark for financial stability. You should consider selecting companies with A or better ratings.

Reputation of the insurer

Often, brokers and agencies sell insurance by one name, but they aren’t the actual insurer you’d call with a problem. Before you buy, learn the name of the actual insurance carrier you’d like to purchase from to explore their reputation for all of the above. You can Google for reviews or search any career Facebook groups you might belong to.

Learn the pros and cons about the different ways to buy insurance

What to Know About Your Supplemental Policy

After you purchase a supplemental policy, these are the things you’ll want to have easy access to or know off the top of your head:

  • How (and who) to contact if you are named in a claim or lawsuit
  • How to download your policy documents (i.e., your proof of insurance)
  • If you have a claims-made or an occurrence policy (this will matter if you change jobs or retire and will determine whether you need nose or tail coverage)
  • Who your insurer is (if you buy through a broker or organization, they will not be responsible for your claim)
  • Your limits of liability (the funds available per claim and per policy period)
  • The litigation process
  • Your state’s laws and an example of a covered claim vs. an uncovered claim
  • Annual premiums
  • Whether your policy automatically renews each year — and when

Final Thoughts

So when should you get supplemental malpractice insurance coverage? That’s the million-dollar question. According to New York–based malpractice attorney Richard Mermelstein, it all depends on what kind of control you want to have over your coverage and whether you want to protect yourself from things that might not be included in your employer’s policy. Getting sued can cost you thousands of dollars just for your legal defense. Then there’s a punitive damages settlement you might need to pay (often hundreds of thousands of dollars). A policy can protect your personal assets from significant financial loss.

Having a supplemental policy is like wearing a seatbelt. You hope you never need it, but it’s helpful to have in place. It also can cost as little as $90 a year, so it’s not a ton of money to get a huge amount of security.

Need independent insurance? Explore Berxi's medical malpractice insurance options and start your quote today.


Image courtesy of iStock.com/marchmeena29


Last updated on Oct 06, 2023.

Originally published on Mar 30, 2023.

The views expressed in this article are those of the author and do not necessarily reflect those of Berxi™ or Berkshire Hathaway Specialty Insurance Company. This article (subject to change without notice) is for informational purposes only, and does not constitute professional advice.

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