Insurance Glossary
Clear definitions of medical malpractice insurance terms and concepts.
A
Aggregate Limit
The maximum amount your insurance policy will pay for all claims during the policy period. For example, a $1M/$3M policy has a $3 million aggregate limit.
C
Claims-Made Policy
Insurance coverage that applies to claims made and reported during the active policy period, regardless of when the incident occurred (after the retroactive date).
Consent to Settle
A policy provision requiring the insurer to obtain your permission before settling a claim. Protects you from unwanted settlements that might harm your reputation.
D
Defense Costs
Legal expenses incurred defending against a malpractice claim, including attorney fees, expert witnesses, court costs, and investigation expenses.
E
Extended Reporting Period (ERP)
Also known as "tail coverage," this extends the period during which claims can be reported under a claims-made policy after it has ended.
I
Incident
A specific act, error, omission, or alleged negligence that forms the basis of a malpractice claim. The date of the incident is critical for coverage determination.
Indemnity
The portion of your insurance coverage that pays for settlements or judgments. Separate from defense costs in most policies.
M
Mature Premium
The stable premium level reached after several years with a claims-made policy, typically achieved in year 4-6 of continuous coverage.
N
Nose Coverage
Insurance that covers incidents that occurred before your current policy started. Also called "prior acts coverage" or "retroactive coverage."
O
Occurrence Policy
Insurance that covers incidents occurring during the policy period, regardless of when the claim is filed, even years after the policy expires.
P
Per Occurrence Limit
The maximum amount your policy will pay for a single claim or incident. For example, in a $1M/$3M policy, $1 million is the per occurrence limit.
Prior Acts Coverage
Coverage for incidents that occurred before your current policy's start date. Essential when switching from one claims-made policy to another.
R
Reporting Endorsement
An addition to your policy that extends the time period during which you can report claims. Different from tail coverage in cost and scope.
Retroactive Date
The earliest date that an incident can occur and still be covered by your current claims-made policy. Usually set to your first day of coverage.
S
Step-Up Premium
The incremental increase in premium each year as a claims-made policy matures, reflecting increased exposure as more prior years are covered.
T
Tail Coverage
Extended reporting period coverage purchased when ending a claims-made policy. Allows you to report future claims for past incidents.
V
Vicarious Liability
Legal responsibility for the actions of others, such as employees, contractors, or supervised healthcare providers working under your direction.
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