Navigating Medical Malpractice Insurance: The Benefits of Traditional Coverage

Traditional first-dollar professional liability coverage is an insurance policy without a deductible, meaning the insurer assumes all costs within policy limits when a malpractice claim arises.  

Traditional coverage is often associated with lower premium policies or smaller exposures. However, there are advantages to this type of coverage that also appeal to buyers with larger insurance programs. 

A key benefit of first-dollar coverage is its ability to provide a predictable and firm budget for risk transfer. Unlike policies with deductibles – where policyholders face uncertainty in estimating potential losses – first-dollar policies guarantee no additional costs within policy limits during the policy term. This is why first-dollar policies are sometimes referred to as “guaranteed cost” coverage. 

In contrast, policies with deductibles or self-insured retention require the insured to assume some degree of financial risk in exchange for a premium discount. This approach involves a trade-off: the insured bets that their deductible expenses will not exceed the savings gained from a lower premium. Each insured must evaluate their exposures, claim history and financial risk tolerance to determine if this option is suitable for their unique situation. 

Another advantage of first-dollar programs is that they include claim handling and risk management services provided by the insurer. This eliminates the need for an internal claim handling organization or a third-party administrator. 

First-dollar policies offer peace of mind, financial security and simplicity, making them an excellent choice for many insurance buyers. 

MagMutual: Your Trusted Insurance Partner 

Navigating the complexities of insurance options can be challenging, but at MagMutual, we are committed to guiding you every step of the way. Over the coming weeks, we will publish a series of in-depth articles exploring various insurance solutions to help you make informed decisions. Our team of experts is always available to answer your questions and provide personalized advice. Reach out to Kevin Carnell at [email protected] or Johnathan Brutlag at [email protected] to learn more about how MagMutual can support your organization's insurance needs.