Excess Liability Coverage

Excess liability coverage provides additional limits above the primary medical malpractice insurance. It expands the limits of liability in case of a high-severity loss. (The majority of policies provide liability limits of at least $1 million per claim and $3 million in the aggregate per policy period.) Excess coverage usually is purchased at the same time and covers the same policy term as the primary policy. Unless excess insurance is purchased, a physician will be personally liable for all amounts paid in settlement or following an adverse verdict in excess of the stated policy limits. Gaps in coverage should be avoided by ensuring that all liability policies have the same policy-effective dates.

An excess insurance policy may be written by a different insurance carrier. Excess coverage should be carefully selected, because it entails a new policy of insurance that includes its own set of limitations, exclusions, and endorsements, some of which may affect the handling of a particular claim that threatens to tap into the excess coverage. For example, excess insurers typically prefer that claims are settled within the limits of the underlying primary liability policy. The excess insurance policy may contain provisions to facilitate such settlement. Likewise, in some high-risk cases the primary policy may advance the entire policy limit, leaving the excess carrier to defend the remainder of the claim. This may involve litigation over how much the plaintiff should recover in excess of the amounts already paid as a settlement.