Insurance agreements can have a significant impact on the financial and legal risk of a healthcare practice. While insurance policies are often treated as routine business documents, the details can affect coverage, exclusions, liability, claims procedures, and responsibilities between parties.

A careful Review of Insurance Agreements can help healthcare professionals and practice owners better understand their obligations and identify provisions that may require clarification.

Why Insurance Agreements Matter

Healthcare practices may carry several forms of insurance, including professional liability coverage, general liability insurance, property insurance, employment-related coverage, and other policies appropriate to their operations.

Insurance requirements may also appear in employment contracts, independent contractor agreements, leases, vendor contracts, and other business documents.

The practice should understand not only what insurance is required, but also who is responsible for obtaining and maintaining it.

What Does an Insurance Agreement Review Involve?

A legal review may consider provisions such as:

• Coverage requirements
• Policy limits
• Deductibles
• Exclusions
• Claims procedures
• Additional insured requirements
• Indemnification
• Cancellation provisions
• Renewal requirements
• Tail coverage
• Responsibility for premiums

The importance of each provision depends on the type of agreement and the underlying relationship.

Professional Liability Insurance

Professional liability coverage is especially important for healthcare professionals.

An agreement may require a provider to maintain specified coverage throughout the relationship. It may also address what happens after the relationship ends.

Healthcare professionals should understand whether coverage is claims-made or occurrence-based because the structure can affect how claims are handled.

Where claims-made coverage is involved, the parties may also need to consider the availability and responsibility for extended reporting coverage.

Insurance Requirements in Employment Agreements

Employment contracts may specify insurance responsibilities.

For example, an agreement might state that the employer provides professional liability coverage or require the professional to maintain separate insurance.

The contract should clearly identify the responsible party and any required coverage limits.

Ambiguous insurance provisions can create disagreements when a claim arises, so these provisions deserve careful attention before an agreement is signed.

Insurance and Independent Contractors

Independent contractor agreements often include insurance requirements as well.

The practice may require the contractor to maintain professional liability coverage and provide evidence of coverage.

The agreement should also explain what happens if the contractor allows coverage to lapse.

Clear requirements can help both parties understand their responsibilities throughout the relationship.

Indemnification and Liability Provisions

Insurance provisions should not be reviewed in isolation.

Contracts may also contain indemnification and limitation-of-liability provisions that affect how risk is allocated between the parties.

An indemnification clause may require one party to assume certain costs or liabilities under specified circumstances.

These provisions should be reviewed together with the insurance requirements to determine whether the contractual allocation of risk is consistent with available coverage.

Exclusions and Coverage Limitations

Insurance coverage is not unlimited.

Policies may contain exclusions or limitations that affect particular services, circumstances, locations, or activities.

A healthcare practice introducing a new service should consider whether its existing insurance arrangements address the expanded operations.

Legal and insurance professionals may each have different roles in evaluating coverage, and practices should obtain appropriate advice when questions arise.

Reviewing Insurance Agreements Before Signing

Insurance-related contract provisions should ideally be reviewed before the agreement becomes binding.

This is particularly important when:

• Hiring a healthcare professional
• Engaging an independent contractor
• Signing a lease
• Entering a vendor agreement
• Expanding services
• Opening another location
• Changing insurance providers
• Renewing important contracts

Early review provides an opportunity to clarify responsibilities before a dispute or claim occurs.

Common Problems to Watch For

Some agreements create uncertainty because they:

• Require insurance without specifying limits
• Fail to identify responsible parties
• Contain inconsistent insurance requirements
• Overlook post-termination coverage
• Use broad indemnification language
• Ignore policy exclusions
• Require coverage that may not be commercially available

Careful review can help identify provisions that deserve additional discussion.

Frequently Asked Questions

Why is a review of insurance agreements important?

Insurance provisions can affect financial responsibility and risk allocation. Reviewing them can help clarify obligations before a claim occurs.

Should healthcare contracts include insurance requirements?

Many healthcare relationships benefit from clearly documented insurance responsibilities, although the appropriate requirements depend on the circumstances.

What is tail coverage?

Tail coverage generally refers to extended reporting coverage associated with certain claims-made insurance arrangements. The specific terms and availability depend on the policy.

Conclusion

A thorough Review of Insurance Agreements can help healthcare practices and professionals better understand how insurance responsibilities interact with their contracts and operations.

By examining coverage requirements, liability provisions, indemnification, policy limits, exclusions, and post-termination obligations, parties can identify potential areas of uncertainty before they become more serious problems.