Hospitals purchase insurance policies to protect against catastrophic losses and to mitigate the damages incurred from unforeseen incidents and accidents. Hospital insurance policies can be offered as stand-alone products, or as riders to larger policies. A single, larger policy is more convenient to administer, has lower premium costs and provides a uniform defense when a hospital sued. Stand-alone policies offer broader coverage and additional services but require additional administration and higher premiums.
Directors and Officers Liability Insurance
Directors and officers liability insurance (D&O) protects a hospital's directors and officers from claims made against the hospital. Directors and officers can be held personally responsible for the acts of the company, and their personal assets may be attached to any lawsuit brought forward by an injured party. D&O coverage reimburses directors and officers for any losses suffered, reimburses the hospital for the cost of indemnification or covers the hospital’s losses.
Employment Practices Liability Insurance
Employment practices liability insurance (EPLI) covers a hospital when it is sued by current, former or potential employees for violating legal rights. Areas covered include discrimination (age, sex, race, and disability), wrongful termination and sexual harassment. EPLI provides coverage for defense costs and compensatory damages arising from lawsuits. However, coverage for intentional acts of discrimination and punitive damages are not normally covered. EPLI is often added as a rider to a hospital’s D&O liability insurance policy, but can also be purchased as a stand-alone policy.
Errors and Omissions Insurance
Errors and omissions insurance (E&O), which also is known as malpractice insurance or professional liability insurance, covers employees who give advice, make recommendations or create solutions for problems. E&O insurance covers an employee when he does something he should not (error) or neglects to do something (omission) he should have done. The policy supplies money to defend the company and the employee regardless of the claim's validity.
Equipment Breakdown Insurance
Equipment breakdown insurance (EBI) covers financial losses that stem from the sudden breakdown of equipment and is written to fill the gaps left by property liability coverage. EBI pays for the cost to repair or replace damaged equipment, lost revenue, costs to lease temporary replacement equipment and other expenses caused by the equipment failure. Legal expenses incurred while defending against claims naming equipment failure as the cause of the breakdown are also covered.
Commercial General Liability
Commercial general liability (CGL) coverage protects the hospital against claims that occur when an accident or injury happens on its premises. CGL covers medical expenses, the cost of defense, including investigations and settlements, all bonds or judgments needed while pursuing an appeal and compensatory and general damages.
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