1. Forms
2. PR
3. PR-00-03

What the form is

The PR 00 03 Hospital Professional Liability Coverage Form is an insurance policy form that provides coverage to hospitals for legal liabilities arising from professional medical services. Its core function is to pay sums that the insured hospital becomes legally obligated to pay as damages because of injury caused by a "medical incident". The coverage applies only if the injury is caused by a "medical incident" that takes place in the "coverage territory" and occurs during the policy period. Furthermore, the insurer has the right and duty to defend the hospital against any "suit" seeking those damages, although this duty ceases once the applicable limit of insurance has been exhausted through judgments or settlements.

Classes of business it applies to

This form is specifically designed for and applies to hospitals. It addresses the unique professional liability exposures faced by these institutions in the course of providing healthcare services.

Real-world example: If a patient undergoes surgery at an insured hospital and subsequently suffers complications allegedly due to a medical error by hospital staff (e.g., incorrect medication administration or a surgical mistake), and the patient sues the hospital, the PR 00 03 form would be triggered to cover the hospital's defense costs and any resulting settlement or judgment, subject to policy terms and limits.

Special considerations

• Definition of "Medical Incident": A key aspect of the form is its definition of "medical incident." All related "medical incidents" arising out of the providing of or failure to provide professional health care services to any one person are considered a single "medical incident" for the purpose of applying policy limits.
• Prior Knowledge of Injury: The insurance applies to injury only if, prior to the policy period, no insured knew that the injury had occurred. If an insured knew of the injury before the policy period, any continuation or recurrence of that injury will be deemed to have been known prior to the policy period.
• Insurer's Right to Settle: The form grants the insurer the discretion to investigate any "medical incident" and to settle any claim or "suit" that may result.
• Deductibles: The PR 03 00 Deductible Liability Insurance endorsement can be used in conjunction with PR 00 03. This endorsement introduces a deductible amount that the hospital would be responsible for paying before the insurance coverage responds. For instance, if a hospital has a $250,000 deductible per medical incident and a covered claim amounts to $1 million, the hospital would pay the first $250,000, and the insurer would cover the remaining $750,000, up to the policy limit.
• Exclusions: Like all insurance policies, PR 00 03 contains exclusions. For example, it includes an exclusion for injury arising out of the ownership, maintenance, use, or entrustment to others of any auto, aircraft, or watercraft. However, this auto exclusion does not apply to the loading or unloading of patients from any "ambulance" (a defined term). The form also contains an antitrust law exclusion.

Key information for agents and underwriters

• Risk Assessment: Underwriting hospital professional liability requires a thorough evaluation of the hospital's operations. This includes the types of medical services offered, the qualifications and experience of medical staff (including whether physicians are employees or independent contractors with admitting privileges), historical claims data, and the robustness of the hospital's risk management and patient safety programs.
• Limits of Liability: The form specifies an "Each Medical Incident Limit" and an "Aggregate Limit". Given the potential for high-value claims in hospital settings, selecting adequate limits is crucial. Underwriters will assess the hospital's size, scope of services, and geographic location when determining appropriate limits and pricing.
• Coverage Territory: The policy defines the "coverage territory" where the "medical incident" must occur. This is typically the United States of America (including its territories and possessions), Puerto Rico, and Canada.
• Comparison with Other Forms: It is important for insurance professionals to understand the distinctions between PR 00 03 and other professional liability forms, such as PR 00 01 (Physicians, Surgeons and Dentists Professional Liability) or PR 00 07 (Blood Banks Professional Liability Coverage Form). For instance, PR 00 07 mirrors PR 00 03 in much of its language but has different exclusions (e.g., no antitrust exclusion) and definitions (e.g., no definition for "ambulance" as the auto exclusion is broader).
• Impact of Endorsements: Endorsements like PR 03 00 (Deductible Liability Insurance) can significantly alter the coverage structure and the hospital's retained risk, which will influence underwriting and pricing decisions.