Medical Professional Liability Insurance

Legal Brief by Carlos Vasconcelos

Recent reports concerning the increase in the number of proceedings brought against doctors in Portugal and the growth in the amounts of compensation awarded — including reports of cases in which professionals have had to rely on their personal assets to pay amounts not covered by insurance — have once again placed medical liability and the effectiveness of the protection afforded by insurance contracts at the center of public debate.

The issue is particularly significant in a context of increasing complexity in medical practice, greater patient awareness and expectations, and rising litigation. Professional liability insurance does not eliminate a physician’s liability, but it allows the economic risk associated with the obligation to compensate third parties to be transferred to the insurer, within the limits agreed under the policy.

First, a physician whose registration is in force must take out and maintain professional liability insurance that is appropriate to the nature and scope of the risks inherent in the physician’s activities. Medical professional companies and multidisciplinary companies must also take out professional liability insurance. The law further provides that medical clinics and practices must maintain liability insurance and ensure that the professionals working in them are covered by valid insurance.

The mandatory nature of the insurance does not, however, mean that every policy provides sufficient protection. It is essential to verify, among other matters, the insured amount per claim and per policy year, whether sub-limits apply, the medical specialty and procedures actually covered, the inclusion of property damage and non-economic loss, coverage for contractual and non-contractual liability, and the rules applicable to prior events, claims made after the policy has ended, and the consequences of changing insurers.

Judicial experience shows that these issues may be decisive. A policy may limit coverage to the profession or specialty declared, exclude certain procedures or activities, cover only certain professionals, or establish deductibles and indemnity limits that may prove insufficient in the event of serious harm. Likewise, a clinic’s insurance does not necessarily replace the physician’s individual insurance, nor does it always cover acts performed by external professionals, independent service providers, or employees of outsourcing companies.

The notification of a claim also requires particular attention. Timely notice to the insurer, the preservation of clinical and contractual documentation, and coordination with the insurer before accepting liability or entering into settlements may be decisive for the insured’s defense and for the proper application of the policy. Taking out legal expenses insurance and clearly defining the rules governing the conduct of the defense are, therefore, complementary instruments for risk prevention and management.

In short, the formal existence of mandatory insurance should not be treated as a mere administrative requirement. Physicians, professional companies, clinics, and practices should regularly review their policies, comparing them with the actual nature of the activities carried out, the specialties practiced, the risks involved, and the amounts that may potentially be awarded in compensation.

In a context of increasing compensation awards, the difference between being insured and being adequately protected may translate into a very significant difference in financial exposure.