Shopping your coverage? Here's what you need to know.

With the sometimes stunning costs of medical malpractice insurance, many physicians are looking for better (and hopefully less expensive ways) to cover thier exposure. After all, if there's one thing we can all agree on, it's that we want to get the most for our money. Whether its a new car or a new computer, we'll comparison shop to be sure we're getting the biggest bang for our buck and our insurance is no exception. But while price is important, it's not the only difference you should be concerned with. Here's some things you need to know when comparing medical malpractice coverage:

Prior Acts
"Prior acts" is a term you'll find on a claims-made policy. Unlike an occurrence policy, a claims-made form covers incidents and events that are reported during the current policy period. In addition to this reporting requirement, the incident or event must have occurred during the period between your retroactive date and the reporting date of the claim.

For example, if you have a claims made policy effective 9/1/06 to 9/1/07 with a retroactive date of 9/1/86, your current policy will cover acts that are both reported during the 06/07 policy period and that occurred on or after 9/1/86. This is your prior acts. Without that retroactive date, your policy will not cover claims that occurred before your 9/1/06 effective date, even if they are reported during the current policy period.

Why is this important? Many physicians receive marketing letters from agents offer unbelievably low premiums. Often, the reason the premiums are so low is that there is no prior acts coverage included in the price. If you change policies without retaining your current retroactive date, you'll lose your protection for any acts that occurred prior to your new policy period.

Defense Costs
If you look at your policy's declarations page, you'll notice two limits: an aggregate and a "per incident" amount. The aggregate is the most your policy will pay no matter how many incidents you have. Exceed this amount, and you've exhausted your policy limits. The per incident (also called "per occurrence") is the most your policy will pay per covered claim.

Ideally, you want these limits to be used for indemnity payments only, such as a settlement amount or judgment, with any defense expenses being "outside your policy limits". In this scenario, all attorney's fees, deposition expenses and costs for experts are paid in addition to your policy limits. If defense is "inside the limits", any expenses will erode your policy limits, giving you less for settlements and judgments.

Guaranty Fund
The Guaranty Fund is a "pool" of cash paid by various member companies in the state to protect policy holders in the event their insurance company becomes insolvent. If your insurance company is a member of the Fund, you'll be protected in the event they file for bankruptcy. Many insurers however, are not a member of the Fund. RRG's (risk retention groups) and private associations are two examples of insurers that are typically associated with the Guaranty Fund. Should they file for bankruptcy or become financially insolvent, you may be the one left holding the proverbial bag.

Of course, this isn't a complete list. You'll also want to be sure your new policy provides the same coverage, deductibles and other features as your current coverage. To be sure you're getting the best coverage for your money, give us a call. We'll help you compare potential insurers and find the right policy for you.