What is a Claim Trigger in a Medical Malpractice Insurance Policy?

Arguably, this could be the single most important section of a malpractice insurance policy.  Basically, the claim trigger (or definition of a claim) is a method insurance companies can use to tremendously restrict coverage.  This restriction of coverage can adversely impact the quality of a physician’s malpractice policy.  This same restriction of coverage, however, almost always lowers the premium.  

There are two basic claims triggers/claim definitions in a malpractice insurance policy.  These are incident sensitive form and demand form

Incident Form
An incident sensitive claim trigger will recognize an incident, adverse outcome, etc. in addition to a lawsuit as a covered claim. 

Demand Form
A demand form will not recognize an incident or adverse outcome. 

This has a significant impact on the quality of a physician’s malpractice insurance.  For example:

Assume an OB/GYN has been treating a healthy pregnant woman throughout her entire pregnancy.  The patient is not high risk, is completely compliant with all prenatal instructions, and her labor results in a still-birth.  Insurance companies realize still-births are a risk of pregnancy, however, they also consider them an adverse outcome. 

With an incident sensitive claim trigger, the insurance company will immediately recognize this mater as a covered claim (once properly notified of the incident).  A demand form does not recognize incidents, so this type of policy would not cover this claim upon notice of the incident.  A demand form would only recognize this as a covered claim once an actual demand for damages was made (claim letter from attorney, actual lawsuit, etc.).

How does this impact the physician? 
Continuing with the still-birth case in the previous paragraph, here is an example:

The physician’s malpractice insurance policy is up for renewal in two months.  The physician has been informed that, company-wide, there have been large losses, therefore, the physician’s renewal premium is being increased by 50%.  Obviously, the physician will want to shop the market to avoid the 50% premium increase.  

The physician obtains several quotes from prominent insurance companies and decides to switch to ABC Insurance Company which has a competitive premium and attractive policy features. 

Just like all insurance companies, ABC Insurance Company will require their own completed application prior to approving coverage.  Their application has a question which states “Do you know of any adverse outcomes or incidents which could reasonably result in a claim.”  To our knowledge, every malpractice insurance company has a question such as this on their application.  The physician must answer “yes” since a patient’s labor just resulted in a still-birth. Since this question was answered “yes”, ABC Insurance Company would require a claim form with full details of the recent still-birth.  ABC Insurance Company would then issue the policy, with prior acts and an exclusion which denies coverage for any future lawsuit which may develop from this particular still-birth.

If the physician’s present insurance policy was an incident sensitive form, the exclusion from ABC Insurance Company would not matter, since the present company would recognize the incident as a covered claim.  However, if the physician’s present insurance policy was a demand form  the exclusion from ABC Insurance Company would be critical.  Again, a demand form policy will not recognize incidents.  The still-birth incident just occurred and has not yet developed into a lawsuit.  The present insurance company does not yet recognize this as a covered claim.  Therefore, if the physician switched to ABC Insurance Company, there would be not be coverage for this potential lawsuit.  To be sure of coverage, the physician would need to remain with the present insurance company and absorb the 50% premium increase at renewal.

If you have any questions about your renewal or searching for a new policy, please contact us and we’d be happy to help you navigate the world of malpractice insurance policies.

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