Discussion of Coverage

Summary: In most territories, Insurance Services Office (ISO) offers two standard forms for hospital professional liability insurance. One form, designated PR 00 03 09 08, covers a hospital's liability for damages arising out of medical incidents that occur during the policy period. The other form, PR 00 04 09 08, the claims-made policy, covers medical incidents for which claim is first made against the insured and reported to the insurer during the policy period.
Apart from this difference, the two forms provide essentially the same scope of coverage. Each amounts to a combination of malpractice and products liability insurance, as each covers claims arising out of professional treatment as well as from medicines, food, appliances, etc., dispensed by the hospital. And, despite differences in phrasing, each covers essentially the same types of incidents, subject to the same exclusions. The pages that follow note some of the differences and the similarities between the forms.

Topics covered:
PR 00 03 insuring agreement
Exclusions
Supplementary payments
Persons insured
Limits of insurance
Conditions
Definitions
Claims-made coverage

PR 00 03 Insuring Agreement

a.We will pay those sums that the insured becomes legally obligated to pay as damages because of injury to which this insurance applies. We will have the right and duty to defend the insured against any “suit” seeking those damages. However, we will have no duty to defend the insured against any “suit” seeking damages for injury to which this insurance does not apply. We may at our discretion investigate any “medical incident” and settle any claim or “suit” that may result. But:

(1)The amount we will pay for damages is limited as described in Section III—Limits of Insurance; and

(2)Our right and duty to defend end when we have used up the applicable limit of insurance in the payment of judgments or settlements.

No other obligation or liability to pay sums or perform acts or services is covered unless explicitly provided for under Supplementary Payments.

b.This insurance applies to injury only if:

(1)The injury is caused by a “medical incident” that takes place in the “coverage territory”; and

(2)The injury occurs during the policy period.

(3)Prior to the policy period, no insured listed under Paragraph 1 of Section II – Who is An Insured and no “employee” authorized by you to give or receive notice of a “medical incident” or claim, knew that the injury had occurred, in whole or in part. If such a listed insured or authorized “employee” knew, prior to the policy period, that the injury occurred, then any continuation, change or resumption of such injury during or after the policy period will be deemed to have been known prior to the policy period.

c.Injury which occurs during the policy period and was not, prior to the policy period, known to have occurred by any insured listed under Paragraph 1. of Section II – Who Is An Insured or any “employee” authorized by you to give or receive notice of a “medical incident” or claim, includes any continuation, change or resumption of that injury after the end of the policy period.

d.Injury will be deemed to have been known to have occurred at the earliest time when any insured listed under Paragraph 1. of Section II – Who Is An Insured or any “employee” authorized by you to give or receive notice of a “medical incident” or claim:

(1)Reports all, or any part, of the injury to us or any other insurer;

(2)Receives a written or verbal demand or claim for damages because of the injury; or

(3)Becomes aware by any other means that injury has occurred or has begun to occur.

Analysis

The key term upon which the insuring agreement rests is “medical incident.” This is a defined term that basically deals with the professional acts or omissions of the insured. Form PR 00 03 09 08 covers medical incidents that occur during the policy period, so this is an occurrence type policy similar to the commercial general liability coverage form, CG 00 01 04 13.

Specifically, the form defines “medical incident” as follows: