Deconstructing the terms contained in a Certificate of Insurance.
When applying for a position in a medical facility or signing medical employment contracts, physicians should request and review a “Certificate of Insurance” for the hospital program. Unfortunately, the terminology in a Certificate of Insurance (also sometimes referred to as a “Certificate of Coverage,” “Certificate of Liability Insurance” or “Certificate of Liability Coverage”) can be difficult to interpret.
Here is an explanation of the sections of a typical COI for medical malpractice insurance used in medical contracts and some important things to consider when reviewing.
Certificate of Insurance Disclaimers
The COI is supposed to be a summary of the insurance policy, but this language states that the information does not form a contract for coverage between the entity being insured and the insurance company or agent. Simply stated, you are hoping that the insurance broker correctly completed the COI, but if not, the terms of the actual insurance policy are what is binding, not the COI. The policy language also applies regardless of the language about insurance provided pursuant to your medical contract.
The second section of the COI states that if the entity on the certificate is an “additional insured” (i.e. not the Named Insured on the policy), then there must be an endorsement (or “rider” — an amendment to the policy) that includes that certificate holder. Just because an entity is named on the COI does not mean that the person has insurance coverage unless there is an endorsement on the actual policy.
Parties to the Insurance Policy
The “Producer” of the policy is the identity of the broker creating the policy while the “Insured” is the entity that purchased the policy.
Note the “Insurer A,” “Insurer B,” “Insurer C,” etc. listed at the left margin of the “Insurer(s) Affording Coverage” column. This will become important later. The “NAIC #” is a five-digit number assigned by the National Association of Insurance Commissioners identifying the insurance company. If you have problems with an insurance company, the NAIC may be able to offer some assistance.
Be careful about policy coverage with an “Insurer” that does not have an NAIC number.
Consider researching the insurance company online for any reported issues. Also consider searching AM Best to see the insurance company’s financial rating. The company should have a rating of B+ or better. Programs with a rating of less than B+ are “vulnerable to adverse changes in underwriting and economic conditions.”
If an insurer is listed as a Risk Retention Group (or “RRG”), there are many differences between RRGs and insurance companies. Under 15 USC § 3902, Risk Retention Groups are exempted from many state laws, rules, regulations, etc that may apply to traditional insurance companies. RRGs are also not allowed to participate in state guaranty funds. Therefore, if an RRG becomes insolvent, there may be little money left in reserves to pay for pending claims — potentially leaving the policyholder personally responsible for any judgments.
Coverage Provided in the Certificate of Insurance
Note the disclaimer statement in the “Coverages” section: “The insurance afforded by the policies described herein is subject to all the terms, exclusions and conditions of such policies.” The policy likely contains multiple other terms not included in the COI but which are still binding upon the insured entities. Remember, the COI is a summary, not an entire policy.
Also note the language stating that “Limits shown may have been reduced by paid claims.” This means that even though the “Limits” column below may contain “$3 million” in aggregate coverage, if another claim was settled in the same calendar year, then there may be no coverage remaining for any other claims settled during that same calendar year. This is important to remember if you are in settlement talks with a plaintiff.
In the “Type of Insurance” column, there are multiple possible types of coverage including “General Liability,” “Automobile Liability,” “Umbrella Liability,” and “Workers Compensation.” Most of these types of liability insurance coverage do not apply to healthcare providers. Unless there is writing and a policy number next to the “Type of Insurance,” no coverage is being provided for any losses relating to those categories. There is no “Medical Malpractice” category included in the pre-populated areas.
Within the “Type of Insurance” boxes are two boxes titled “Claims-Made” and “Occur.” These refer to “claims made” and “occurrence-based” coverage. Claims made coverage to be effective, it must be in effect both when the alleged injury occurred (the date of the alleged malpractice) and when the “claim was made.”
If a claim of negligent medical care is *filed* after the Insured stops paying on the policy and the policy lapses — even if the policy was in effect when the incident occurred — then no coverage is provided. Occurrence-based coverage is in effect as long as the policy was in effect when the alleged injury “occurred.”
Most medical malpractice insurance policies are claims made, but if you can find an occurrence-based policy, that is an added benefit.
The next column to the right is “Policy Number.” This lists the number of the policy that the Insured purchased from the Insurer. Keep this policy number handy. You may need to disclose the number in future applications for hospital privileges and in future insurance applications.
The next two columns are “Policy Eff” and “Policy Exp.” These are the effective and expiration dates of the policy. Unless stated otherwise, no coverage is provided for incidents that occur before the effective date or after the expiration date.
In some cases, a policy may have a “Retro date” listed, meaning that the policy will cover all incidents retroactively to the date listed. If you have been working at a facility more than one year, this “Retro date” should correspond to the date you started working.
In the far right column are the “LIMITS” applied to policy coverage. The amount that an insurance company is willing to pay for a given incident is not unlimited. The numbers to the far right are the insurer’s limit of liability. Standard medical insurance has limits of $1 million per incident and $3 million in aggregate each year. Again, note that if there is a single large payout against one of the additional insured in a policy, then there may not be any additional coverage available for other claims settled in that same policy year.
Additional Terms in the Certificate of Insurance
At the bottom of the COI is box titled “Description of Operations/Locations/Vehicles.” This is where any additional policy requirement, endorsement, addition or other policy modification is contained.
This box may contain policy effective dates, identify the specific additional insured under the policy, and contain any exclusions to the policy. This box also may contain any annual deductible that apply to coverage. Again, remember that the COI is a summary.
The actual insurance policy may contain multiple additional exclusions that are not listed in the COI. Almost every insurance policy has an exclusion of coverage for fraudulent acts. The COI almost never contains such language.
Finally, the very bottom of the COI lists the Certificate Holder. This is not necessarily the primary “Insured” under the policy, but may contain either name of provider’s employer or the provider’s name as an “additional insured.”
Takeaways
- Request and keep copies of a Certificate of Insurance for all medical contracts at all facilities you work. It is surprising how often companies and policy terms change.
- Keeping a copy of the Certificate of Insurance will also help you remember policy numbers and coverage dates when applying for malpractice insurance coverage in the future. Insurance applications often ask for such information.
- If leaving a position or a hospital, consider requesting a “loss run report” from the insurance company involved. This is a summary from the insurer describing the insured’s claims history including whether any claims have been made, a description of the claim, whether a claim has been paid and the amount and whether a claim is closed or is still pending.
