Glossary

Aggregate Limit – The maximum amount an insurer will payout on behalf of a policy holder for all covered losses during a set time period, usually one year.

Allied Medical Provider – Healthcare providers that do not include doctors (MDs, DOs, DDSs, or DMDs).  They typically include, but are not limited to NPs, PAs, RNs, CRNAs, and physical therapists.

Application – A document insurance companies request to be completed to gather general information about a client to begin the quote process. 

Binder – An official document issued by the insurance company acknowledging that coverage is in place, listing who is covered, along with policy limits and dates of coverage.   

Certificate of Insurance – A statement of coverage issued by the insurance company.

Claims-made Policy – The most common type of medical malpractice insurance.  It  protects the policyholder against claims of medical malpractice filed during the policy’s in force period. Since a physician can still have a claim filed against him or her after a claims-made policy ends, most physicians need to purchase separate tail coverage to ensure that they continue to be protected. 

Claims-made policies start out relatively inexpensive (compared to an occurrence policy), and increase in premium from year one of the policy to about year four or year five, and then generally plateau in cost. 

Declarations Page – A summary page of your insurance policy that often includes an overview of the policy and coverages, limits and deductibles, and the dates your policy is in effect.

Deductible – The portion of the insured loss (in dollars) to be paid by the policy holder.

Endorsement – An amendment or rider to an insurance policy adjusting the coverages and updating and/or changing the terms of the original policy. 

Excess Limits Coverage – Additional coverage beyond the basic liability limits in an insurance policy.   

Gap in Coverage – A period of time during which a person or an entity did not have insurance coverage. A gap in coverage can also be created if an individual or an entity had a claims-made policy and did not purchase tail coverage after the policy ended.   

General Liability – General liability insurance is a type of liability insurance that provides coverage to businesses for claims that it caused bodily injuries and/or property damage to others as well as personal injury coverage, like libel or slander. This coverage is different from medical malpractice insurance.   

Insurance – is a form of risk management primarily used to hedge against the risk of a contingent, uncertain loss. Insurance is defined as the equitable transfer of the risk of a loss, from one entity to another, in exchange for payment.

Insured – a person or organization covered by insurance.

Lawsuit – a claim or dispute brought to a law court for adjudication. Lawsuit is a civil action brought in a court of law in which a plaintiff, a party who claims to have incurred loss as a result of a defendant’s actions, demands a legal or equitable remedy.

Liability insurance – insurance that provides protection from claims arising from injuries or damage to other people or property.

Loss Run Report – A report produced by an insurance company listing all open and closed claims incurred by a covered or previously covered individual or entity.  Loss run reports also list the cost to defend a claim and the reserves set aside by the insurance company for an open claim.   

Malpractice – act of causing damage or injury to a person or persons as a result of negligently performing a professional duty or intentional wrongdoing. Doctors, surgeons, nurses, and most other medical professionals are sometimes required to purchase malpractice insurance, also called personal liability insurance, before becoming employed by a facility or opening a private practice.

National Practitioner Data Bank Self Query – A claim history report put out by the National Practitioner Data Bank that only lists closed claims and administrative or state medical board proceedings.     

Occurrence Policy – Protects the policyholder against claims of medical malpractice that occurred while the policy was in effect. This type of policy essentially has the tail policy built into the pricing, so purchasing a separate tail insurance policy is unnecessary.  If the policy is canceled for any reason, the insurance company will defend any claim brought against the policy holder during the period they were covered prior to cancellation under the policy. 

Per Claim Limit - The maximum amount an insurer will pay out for a claim, as stated in the policy. 

Policy - A written contract outlining the legal obligations of an insurance company. 

Policy Limits – The maximum amount an insurer will pay out for a claim and/or in aggregate, as stated in the policy.

Policy Term – The period during which insurance coverage is in effect.  Most medical malpractice insurance policies are one year or 12 months in length. 

Premium – The cost of an insurance policy.

Prior Acts Coverage – This is associated with a Claims Made-type policy.  Coverage starts at the date listed as the retroactive date and covers all claims made for work done from the retroactive date forward.  Sometimes this is also called “Nose Coverage.”

Quote – A quote is a document listing pricing and an outline of coverage being offered by an insurance company.  A quote can mean many different things depending on the state and insurance company.  More specifically, clients should always understand if their quote is a formal bindable quote or if it is a loose indication quote.   

Shared Limits – Healthcare providers may sometimes share limits with each other and/or with the legal entity.  This dilutes coverage for each individual and/or the entity.  This is often done to save premium costs and it’s important to know if you are covered on a shared or separate limits basis.     

Stand Alone Tail – A tail policy that is not purchased from the incumbent insurance company.  They are often less expensive than tail policies purchased from the incumbent carrier. 

Subjectivities – Items required by an insurance company to bind coverage and issue an insurance policy. 

Tail Policy – A policy that should be purchased if coverage is canceled for a current claims-made policy, to avoid a gap in coverage.  This is a policy that covers a provider if a claim is made for the work done under a prior insurance policy.  If the client wishes to purchase a tail from another carrier, it is called a Stand Alone Tail.