The Surprise You Don't Want:
Discovering Your Professional Liability Coverage Is Not Enough

"Surprise! Your insurance policy might not protect you from that lawsuit!"

It would be enough to ruin someone forever on the concept of surprises. A surprise for a birthday? Great. A lottery ticket? Fantastic. But in the case of a lawsuit? No, thank you.

To help keep surprises restricted to happy occasions, PRMS participated in a panel discussion at the 2008 American Psychiatric Association Annual Meeting titled, "How to Launch a Successful Private Practice." The three-part series began with a discussion on obtaining proper professional liability insurance. Martin Tracy, JD, ARM, President and CEO of PRMS, began with the most important lesson he wanted to teach all psychiatrists:

"All practice policies are not the same. It's a huge concept to learn."

Tracy does not only know insurance, but he also knows psychiatrists. "I've spent twenty-five years talking to psychiatrists every day of my working life," he told attendees. This combination has resulted in a unique insight into the professional liability needs of psychiatrists and how those needs differ from other medical specialties.

The only bad news Tracy gave attendees was that in order to select the best insurance possible you must invest time into reading policies, which don't exactly top the New York Times bestseller lists. The reading may be boring and at times tedious, but it also is critical for any psychiatrist. "Unless you understand what you're buying," he said, "you might not have what you need." Not having what you need leaves you susceptible to surprises down the road—very costly surprises.

To support his point, Tracy mentioned several things for psychiatrists to keep in mind while shopping for professional liability insurance:

  • Occurrence versus Claims-made: These are two very different coverage options, and only you can decide which is best for you. "I can't tell you what kind is good for you. It's like walking up to a person on the street and asking them if they should buy a Mac or a PC. You can't answer that question without asking twenty different questions first," said Tracy.
  • Consent to Settle: Some companies will settle a lawsuit without your consent. Know what the policy is regarding your consent to settle.
  • Portability: Not all insurance companies are licensed to write in all states, creating a headache for you in case of a move.
  • Details, details, details: Don't assume that the company will cover everything that you need. "Insurance companies are free to pick and choose what risks they take on and whom they will insure," said Tracy.

The good news is that with the investment of some time and reading, you can be an informed consumer and choose the coverage best suited for you. Tracy told attendees, "Companies should be able to provide you with a sample policy as you make your decision." Ask for one, read it carefully, and leave the surprises for happy occasions.

More PRMS News

Two Top Liability Risks for Psychiatrists: Patients with Suicidal Behavior and Psychopharmacology

Patient suicides may trigger the most lawsuits, but according to PRMS data, cases with the largest verdicts or settlements don't involve the death of a patient, but significant and permanent physical and neurological damage requiring lifelong care.

2010 Manfred Guttmacher Award

We congratulate Robert I Simon, MD and Kenneth Tardiff, MD, the recipients of the 2010 Manfred Guttmacher Award. The Guttmacher Award is co-sponsored by the American Academy of Psychiatry and the Law since 1982 and supported by a grant from Professional Risk Management Services, Inc., manager of The Psychiatrists' Program.