How Much Insurance Is Enough

The question “How much insurance is enough insurance?” as it pertains to medical professional liability insurance is far more complicated than it used to be. Outside influences such as the legal climate, media exposure and efforts to lower health care expenditures are reasons why health care professionals and facilities should periodically analyze insurance needs and key factors impacting those needs. 
  
In Kansas, certain health care providers (physicians, hospitals, CRNAs, and others as defined by K.S.A. 40-3401) are required to carry basic coverage. This basic coverage provides $200,000 in coverage per claim, and $600,000 in coverage annual aggregate limits, and is available from insurance carriers authorized to write business in Kansas, risk retention groups, and qualified self-funded programs. Defined health care providers are also required to select a layer of coverage from the Health Care Stabilization Fund (HCSF) to supplement basic coverage. Together, these two layers make up the professional liability coverage for the majority of Kansas physicians and hospitals. In Missouri, there is no Health Care Stabilization Fund; therefore, most health care professionals purchase $1M in limits from their insurance carrier.

When concerned with the possibility of facing future claims which might exceed the aforementioned coverage, it is common to consider the purchase of additional insurance, such as excess or umbrella coverage. Such coverage is provided by the purchase of an additional policy. The additional coverage becomes payable only after the required coverage is exhausted. Most companies sell excess coverage in $1M layers. Each layer will come with a distinct effective date, or when the policy is issued, and a retroactive date, referring to the earliest date that something may occur in order to trigger coverage. Keep in mind that additional insurance cannot be purchased to cover existing claims.

For physicians and other individual health care professionals, the decision to purchase additional coverage is a personal one. To assist you in evaluating whether or not a need exists for additional coverage, please click here to view Physician/Individual Considerations.  

For hospitals, the corporate status may play a large role in deciding whether to purchase additional coverage. The Kansas Tort Claims Act limits the amount of damages a plaintiff can recover against hospitals that are owned by municipalities, and the employees of such hospitals. Liability for claims within the scope of the Kansas Tort Claims Act, is capped at $500,000.00 under K.S.A. 75-6105(a), unless additional insurance in excess of such cap was purchased.  In that case, the limitation on liability is fixed at the amount of the increased insurance coverage. By contrast, a private hospital may not have the protection afforded public hospitals owned by municipalities, so the decision regarding how much insurance to purchase will be different. To assist hospitals in evaluating interest or need, please click here to access Hospital Considerations.  

In summary, the best response we have for the question “How much insurance is enough insurance?” is to recommend each individual/hospital periodically review the coverage in effect, the risks and risk tolerance through a method similar to the reviews provided here, then make an informed decision. 

Please feel free to contact the KaMMCO Underwriting Department at 1.800.232.2259 if you have further questions.