Personal Asset Protection 101 / Lesson 03
Which Policy May Respond to Each Liability
Assign each professional and practice liability to a policy, named insured, limit, and effective date.
A malpractice policy may respond to specified professional-liability claims. It does not automatically cover every entity, business operation, or personal liability. Map each material liability to the policy terms, insured status, limit, and effective date that may apply. This review identifies possible uninsured exposures.
Liability insurance may pay covered defense costs or damages under policy terms. Each policy identifies insureds, covered activities, limits, exclusions, and policy period. A limit is the maximum the insurer may pay under a stated rule, subject to the form and facts. An exclusion can remove a specified event or activity from coverage.
Medical professional liability
Medical professional liability insurance is also called malpractice insurance. It covers specified claims that allege harm from professional care. The policy must match the physician's specialty, procedures, locations, work status, and practice entities.
Read the per-claim and annual limits. The per-claim limit applies to one claim. The annual limit applies to all covered claims during the policy period. Check whether defense costs reduce either limit.
A malpractice policy does not cover every event at a medical practice. Employment claims, cyber events, property damage, and premises injuries can require other policies. Read each sublimit and exclusion in bundled coverage. A sublimit is a lower limit for a specified coverage.
Practice liabilities need their own policies
Commercial general liability insurance covers specified bodily injury and property damage from business premises or operations. For example, it can cover a visitor's fall at the office. It does not cover professional medical care. The California Department of Insurance commercial insurance guide explains common commercial coverages and the function of policy limits and exclusions.
A practice can also need employment practices, cyber liability, commercial auto, workers' compensation, or other insurance. The practice's people, property, vehicles, data, and services determine the need. A package policy combines some coverages, but each coverage has its own terms.
The applicable policy must cover each practice entity through its named-insured provisions, definitions, or endorsements. The formation records, issued policy, and endorsements provide the exact legal names for the comparison. The insurance submission should also identify each location, clinician, procedure, and material change that the carrier requires.
Household policies do not increase the malpractice limit
A personal auto policy addresses covered vehicle liability. A homeowners policy addresses specified personal and premises liability. These policies do not cover professional medical care. The California Department of Insurance publishes separate guides for auto and residential insurance because the policies address different risks.
A personal umbrella can add limits above specified home, auto, and other personal policies. It can exclude professional services. Do not add its limit to the malpractice limit unless the issued umbrella expressly covers professional medical liability.
The separate policies still matter when you calculate property that could remain available after an above-limit malpractice judgment. Record them as personal policies, not as malpractice coverage.
Find gaps between policies
Use the physician liability worksheet to record the following facts for each material liability:
- The person or entity that can be liable.
- The policy and named insured that match that person or entity.
- The covered activity and location.
- The per-claim and annual limits.
- The effective date and, for claims-made coverage, the retroactive date.
- Any exclusion, sublimit, deductible, or shared limit that changes the result.
For example, a malpractice policy can name the physician but omit the new professional corporation. A commercial general liability policy can cover an office fall but exclude professional care. A personal umbrella can add home and auto limits while excluding both professional and business liability.
The review is useful when each material liability has a documented potential policy route or a consciously accepted uninsured exposure.