New York Malpractice: Physician Corporate Coverage Overview

01 Nov New York Malpractice: Physician Corporate Coverage Overview

When discussing malpractice coverage, corporate coverage is one topic that seems to be regularly overlooked.  While corporate coverage is simple in theory (coverage that offers protection for a corporation for the professional services rendered by the practice and its providers/employees), malpractice insurers in New York all have their own nuances with regards to the coverage offered.  We’ve identified the general concepts for corporate malpractice coverage below so that you should know what questions to ask before you bind or change coverage.

The two most common physician owned entities in New York are Solo Professional Corporations (owned by one physician/owner) and Partnerships (owned by two or more physician/owners). The basic corporate coverage concepts are outlined below:

Solo Corporation

Pros

• Corporate coverage is typically added at no cost for defense only or on a shared limit basis with the physician/owner

Cons

• The physician/owner must also be named in order for corporate coverage to respond
• No corporate coverage is included for medical services rendered solely by employed physicians or midlevels insured with a different malpractice insurer

Common Issue

• Solo Corporation has an employed physician or midlevel insured with different carrier

Potential Solutions

• Move the employed physician/midlevel on to the owner/physician’s policy
• Add corporation as an Additional Insured for Vicarious Liability on to the employed physician/midlevel’s policy

Partnership/Multi-Shareholder Corporation

Pros

• If all physicians/owners are insured by the same carrier, this coverage is typically added at no cost for defense only or on a shared limit basis

Cons

• No free corporate coverage is provided if physicians/owners are insured with different carriers
• Additional cost required to obtain corporate coverage if physicians/owners stay with different carriers

Common Issue

• The two physician/owners are insured with different malpractice insurers

Potential Solutions

• Move all physician/owners to the same malpractice carrier
• If one carrier is not an option, purchase a separate corporate limit

With this being said, the considerations above are not absolute.  With each insurer having different rules and policy wording, it is nearly impossible to confirm coverage without the following questions answered: what is the type of corporation, who are the owners, where are the owners insured, and where are the employed physicians/midlevels insured (if any)? 

If you are concerned about your corporate coverage (or any malpractice matter), please feel free to contact us and we will perform a full practice assessment.

Phalanx Healthcare Solutions is a New York based medical malpractice insurance consultant specializing in insurance and reinsurance solutions for physicians, physician organizations, and healthcare systems. For more information, visit our web site at www.phalanxllc.com.