Professional Liability Insurance - Physician Contract Glossary

Professional Liability Insurance

Definition

Insurance that protects physicians against medical malpractice claims and provides legal defense coverage.

Examples in Context

“Employer shall maintain professional liability insurance coverage of at least $1 million per occurrence and $3 million aggregate for Physician during the term of this Agreement.”

“Physician shall purchase tail insurance upon termination of this Agreement if the Employer provides claims-made coverage.”

Implications for Physicians

• Essential for financial protection against malpractice claims.
• Often required to obtain hospital privileges or join a group practice.
• Inadequate coverage may leave you personally liable in lawsuits.

Negotiation Tips

• Request confirmation that coverage limits meet hospital credentialing requirements.
• Clarify whether the employer provides claims-made or occurrence-based insurance.
• Negotiate for the employer to cover tail insurance upon termination.

Red Flags and Pitfalls

• High deductibles that the physician must pay out-of-pocket.
• Employer’s right to reduce or cancel coverage without notice.
• Coverage gaps if switching from claims-made to occurrence policies without proper tail insurance.

Related Terms

• Claims-Made Policy
• Tail Insurance
• Notice of Claims

FAQs

• “What is the difference between claims-made and occurrence coverage?”
  • Claims-made covers incidents reported while the policy is active, while occurrence covers incidents that happened during the active policy period, regardless of when they’re reported.
• “Who pays for tail coverage?”
  • Negotiate for the employer to cover this cost if your contract ends without cause.
• “What is the typical coverage limit for physicians?”
  • $1 million per claim / $3 million aggregate is a common standard, but confirm state-specific requirements.

Legal Disclaimer

The information provided in this glossary is for educational and informational purposes only and should not be construed as legal advice. While we strive to provide accurate and up-to-date information, this content is intended to help physicians better understand common contract terms and does not replace professional legal guidance.

For personalized advice regarding your employment contract or other legal concerns, we strongly recommend consulting with a qualified attorney who specializes in physician employment contracts.

You can find experienced legal professionals through our Physician Contract Lawyer Directory.