The fundamentals of liability insurance: physician and organization perspectives.

Professional liability insurance is critical to physicians to protect their assets. Current medical practice reveals that most physicians will experience an allegation of negligence during their medical practice lifetime. Professional liability insurance is a contract between the physician and the insurance company. Physicians must understand the contract to identify the correct policy for their medical practice, to have appropriate coverage for the assumed risks, and to pay premiums that are reasonable within the marketplace. Prudent physicians should understand their duties and rights, as outlined in the liability contract, and the duties and rights of the insurance company. It is imperative for physicians to understand when the policy affords them a right to defend an allegation of negligence and when they must settle, by the structure of the contract. Physicians must understand the issues surrounding settlement and judgment reporting to the National Practitioner Data Bank. Last, physicians need to understand how a physician organization handles professional liability insurance.