When choosing a medical malpractice insurance policy, it’s important to determine if the policy is eroding or non-eroding. Find out the difference and which policy is best for doctors below.
If you have ever been involved in a medical malpractice insurance lawsuit, you may be familiar with the terms “Eroding” or “Wasting” as it relates to the limits of liability your insurance carrier will cover. These terms essentially mean that the per claim limit will be eroded by the legal costs incurred to defend you.
In many cases, the limits of liability are $1,000,000 per claim/$3,000,000 aggregate, so we will use this example:
Assume you have a $1,000,000 per claim limit policy. If you have an eroding policy, the $1 Million Limit of liability will be reduced by the amounts incurred for “claims expenses.” The largest claim expenses are the legal fees for your attorneys defending you. If those fees total $100,000, you have $900,000 left in your limit to pay damages – which could be a monetary judgment or settlement. (Note that many policies are for different amounts, so you should speak with a malpractice insurance broker for an individualized consultation)
A non-eroding or non-wasting policy means the limits of liability are for damages only. Claims expenses, such as legal defense costs, are covered in addition to the stated limits of liability. For this reason, non-eroding policies provide more total coverage.
Eroding policies may be the only affordable option for your unique situation, but it’s worth asking your broker if you can qualify for a non-eroding policy. At MEDPLI, we want to make malpractice insurance less painful for doctors. Feel free to call 800-969-1339 to get answers and help from a live human.