What is a Midterm Switch?

A midterm switch is the act of transferring your medical professional liability coverage from one insurance company to another before the end of your policy period.  At MedMal Direct Insurance Company, we receive dozens of questions every day from physicians about switching their carrier.

Below outlined the most common misconceptions associated with making a midterm switch.

Common Misconceptions:

Misconception:  I can only switch carriers on my renewal date.

Reality:  You can switch now; it’s called a midterm switch, and our clients do it all the time.

You are not bound by your policy coverage dates. In fact, you may save thousands of dollars if you switch before your renewal date. Our team handles these situations often and can help you navigate this simple process.

Misconception:  I’ll be charged an enormous cancellation fee if I switch policies now.

Reality:  Most carriers charge a cancellation fee of 10% of your unearned premium.

If you decide to switch from your current carrier to MedMal Direct prior to your next renewal date, your carrier may have the option to charge a cancellation fee equal to 10% of your policy’s “unearned” premium.

For example, if your current policy runs from January 1 of this year to January 1 of next year, and you decide to switch to MedMal Direct on July 1, then the first six months of the year was “earned” premium and the last six months will be “unearned” premium. 

Current annual premium = $25,000
Unearned premium (July 1 – December 31) = $12,500
Cancellation fee = $1,250 (10% of unearned premium)
Total refund on unearned premium = $11,250

Check with your carrier for the specific terms of your policy.

Misconception:  The savings I would earn by switching wouldn’t outweigh the cancellation fee.

Reality:  Even in a midterm switch, you could enjoy substantial savings.

The savings from switching could vastly outweigh any cancellation fees you may incur. Many insureds save up to 20% or more on their current premium when they switch to MedMal Direct. Using the same policy premium from our previous example, let’s see how much you would save by making a midterm switch:

Current annual premium = $25,000
Cancellation fee from current carrier = $1,250
MedMal Direct Insurance savings = $5,000 (20% of former premium)
Total savings: = ($5,000 - $1,250)= $3,750