Explaining the Certificate of Insurance in Medical Contracts

When applying for a position in a medical facility or signing medical employment contracts, physicians should request and review a “Certificate of Insurance” for the hospital program. Unfortunately, the terminology in a Certificate of Insurance (also sometimes referred to as a “Certificate of Coverage,” “Certificate of Liability Insurance,” or “Certificate of Liability Coverage”) can be difficult to interpret. Below is an explanation of the sections of a typical Certificate of Insurance (COI) for medical malpractice insurance used in medical contracts and some important things to consider when reviewing a COI. To view a larger .pdf version of this sample Certificate of Insurance for medical contracts, click this link.

Certificate of Insurance Disclaimers

The first section of the COI ironically prohibits you from relying upon the information contained in the COI. The COI is supposed to be a summary of the insurance policy, but this language states that the information does not form a contract for coverage between the entity being insured and the insurance company or agent. In other words, a certificate of insurance technically does not equal proof of insurance. You are hoping that the insurance broker correctly completed the COI, but if not, the terms of the actual insurance policy are what is binding, NOT the COI. The policy language also applies regardless of the language about insurance provided pursuant to your medical contract.

The second section of the COI states that if the entity on the certificate is an “additional insured” (i.e. not the Named Insured on the policy), then there must be an endorsement (or “rider” – an amendment to the policy) that includes that certificate holder. Just because an entity is named on the COI does not mean that the person has insurance coverage unless there is an endorsement on the actual policy.

Parties to the Insurance Policy

The “Producer” of the policy is the identity of the insurance agent creating the policy. The broker’s contact information should be included to the right of the “Producer” field.
The “Insured” is the entity that purchased the policy.
The “Insurer(s) Affording Coverage” column lists the names of the insurance carriers providing coverage. Note the “Insurer A,” “Insurer B,” “Insurer C,” etc. listed at the left margin. This will become important later.
The “NAIC #” is a five-digit number assigned by the National Association of Insurance Commissioners identifying the insurance company. If you have problems with an insurance company, the NAIC may be able to offer some assistance. A map containing the offices in each state can be found at this link. Be careful about policy coverage with an “Insurer” that does not have an NAIC number.
Consider researching the insurance company online for any reported issues. Also consider searching AM Best to see the insurance company’s financial rating. The company should have a rating of B+ or better. Programs with a rating of less than B+ are “ vulnerable to adverse changes in underwriting and economic conditions.”

 – Risk Retention Groups

If an insurer is listed as a Risk Retention Group (or “RRG”), there are many differences between RRGs and insurance companies. Under 15 USC § 3902 , Risk Retention Groups are exempted from many state laws, rules, regulations, etc that may apply to traditional insurance companies. RRGs are also not allowed to participate in state guaranty funds . Therefore, if a RRG becomes insolvent, there may be little money left in reserves to pay for pending claims – potentially leaving the policyholder personally responsible for any judgments.

Coverage Provided a Medical Malpractice Certificate of Insurance

In the “COVERAGES” section there is another disclaimer. Note the statement “The insurance afforded by the policies described herein is subject to all the terms, exclusions and conditions of such policies.” In other words, the policy likely contains multiple other terms not included in the COI but which are still binding upon the insured entities. Remember, the COI is a summary, not an entire professional liability insurance policy. Also note the language stating that “Limits shown may have been reduced by paid claims.” This means that even though the “Limits” column below may contain “$3 million” in aggregate coverage, if another claim was settled for more than $3 million in the same calendar year, then there may be NO coverage remaining for any other claims settled during that same calendar year. This is important to remember if you are sued and happen to be in settlement talks with a plaintiff.

In the “Type of Insurance” column, there are multiple possible types of coverage including “General Liability,” “Automobile Liability,” “Umbrella Liability,” and “Workers Compensation.” Most of these types of liability insurance coverage do not apply to healthcare providers. Unless there is writing and a policy number next to the “Type of Insurance,” no coverage is being provided for any losses relating to those categories. Note that there is no “Medical Malpractice” category included in the pre-populated areas.

Within the “Type of Insurance” boxes are two boxes titled “Claims-Made” and “Occur.” These refer to “claims made policy” and “occurrence policy.” For a claims made policy to be effective, it must be in effect both when the alleged injury occurred (the date of the alleged malpractice) AND when the “claim was made.” If a claim of negligent medical care is *filed* after the Insured stops paying on the policy and the policy lapses – even if the incident occurred during the policy period – then NO medical malpractice coverage is provided. Occurrence-based coverage is in effect as long as the policy was in effect when the alleged injury “occurred.” Most medical malpractice insurance policies are claims made, but if you can find an occurrence-based policy, that is an added benefit.

In this sample COI, at the bottom of the “Type of Insurance” column there is a row titled “Medical Professional Liability.” Note the letter “A” at the beginning of the row. That letter “A” means that “Insurer A” listed in the column “Insurer Affording Coverage” at the upper left of the policy is providing coverage for professional liabilities. Some hospitals or groups may have several different types of insurance through the same broker – General Liability, Workers Comp, etc. In that case, there may be several “Insurers” listed under the “Insurers Affording Coverage” column. Only the insurer listed in the “INSR LTR” column to the far left of the “Coverages” section is responsible for the coverage listed in the corresponding row.

To the right of the “Type of Insurance” column are abbreviations “ADDL INSR” and “SUBR WVD” meaning “Additional Insured” and “Subrogation Waived.” Ideally a certificate holder wants the “Additional Insured” box marked with an X to reflect that the certificate holder is an Additional Insured under the policy. Recall the “Additional Insured” language in the second section of the COI. If an additional insured is not listed and an endorsement is not present, the coverage is not there. If the “DESCRIPTION OF OPERATIONS” box at the bottom of the COI specifically lists the certificate holder as an additional insured, this language will likely be sufficient in lieu of the “ADDL INSR” box being checked.

The next column to the right is “Policy Number.” This lists the number of the policy that the Insured purchased from the Insurer. Keep this policy number handy. You may need to disclose the number in future applications for hospital privileges and in future insurance applications.

The next two columns are “Policy Eff” and “Policy Exp.” These are the effective and expiration dates of the policy period. Unless stated otherwise, no professional liability coverage is provided for incidents that occur before the effective date or after the expiration date. In some cases, a policy may have a “Retro date” listed, meaning that the policy will cover all incidents retroactively to the date listed. If you have been working at a facility more than one year, this “Retro date” should correspond to the date you started working.

In the far right column are the “LIMITS” of liability applied to policy coverage. The payment that a medical malpractice insurer is willing to make to cover malpractice claims is not unlimited. The numbers to the far right are the insurer’s policy limits. Standard medical liability insurance coverage has limits of $1 million per incident and $3 million in annual aggregate. Remember that if a single large payout against one of the other insureds in a policy maxes out the annual aggregate, there may not be any medical malpractice coverage remaining for other claims settled in that same policy year.

Additional Terms in a Medical Malpractice Certificate of Insurance

At the bottom of the COI is box titled “Description of Operations/Locations/Vehicles.” This is where any additional policy requirement, endorsement, addition, or other policy modification is contained. This box may contain policy effective dates, may identify the specific additional insureds under the policy, and may contain any exclusions to the policy. This box also may contain any annual deductible that apply to coverage. Again, remember that the COI is a summary. The actual insurance policy may contain multiple additional exclusions that are not listed in the COI. For example, almost every insurance policy has an exclusion of coverage for fraudulent acts. The COI almost never contains such language.

Finally, the very bottom of the COI lists the Certificate Holder. This is not necessarily the primary “Insured” under the policy but may contain either name of provider’s employer or the provider’s name who receives individual coverage as an “additional insured.”

Is the COI the same as Malpractice Insurance?

NO! Disclaimers at the top of the COI specifically negate any malpractice insurance coverage unless the underlying insurance policy explicitly provides that coverage. A COI is evidence that insurance exists, but a COI is not proof of insurance. The only proof of insurance is the policy itself. Many court opinions reiterate this concept (see e.g. Moleon v. Kreisler Borg 304 AD 2d 337 (“the certificate is insufficient to establish that [the plaintiff] is an additional insured under a policy especially where, as here, the policy itself makes no provision for coverage”)). If a COI states that there is insurance where none exists, a malpractice insurance agent could potentially be liable for producing an inaccurate COI.

Takeaways for Medical Malpractice Certificates of Insurance

• Knowing the coverage being offered and the company providing the coverage will help you decide whether you are receiving appropriate medical malpractice insurance coverage.
• It is a good practice to request and keep copies of your medical professional liability Certificate of Insurance each year for every facility at which you work. It is surprising how often companies and policy terms change.
• Keeping a copy of the Certificate of Insurance will also help you remember policy numbers and coverage dates when applying for malpractice insurance coverage in the future. Insurance applications almost always ask for such information.
• Remember that a COI is not the same thing as malpractice insurance. If you have doubts about policy coverage, ask to see the actual policy.

Another medical malpractice insurance-related tip: If leaving a position or a hospital, consider requesting a “loss run report” from the insurance company involved. This is a summary from the insurer describing the insured’s claims history including whether any claims have been made, a description of the claim, whether a claim has been paid and the amount, and whether a claim is closed or is still pending (meaning that the case is ongoing at the time of the report).

To read other posts I’ve written on medical contract-related issues, see the “Contracts” section of this site.

Need help deciphering a Certificate of Insurance or navigating your medical contract? Here are some of the services I provide. Give me a call or e-mail me. I’d be happy to try to help.