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Sky-high liability costs have wide impact. For towns, doctors, day-care centers lawsuit protection is hard to find

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``When you couple a shortfall of capacity in the insurance industry with headlines about child molestation in day-care facilities, then you have what I'd call a crisis,'' he says.

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Groups like Child Care Action Campaign have been working to ``gain control of the situation'' by providing better information about day care to insurance companies, he says. Only 12 percent of all day-care centers ever have a need to use their liability-insurance policies, he adds. For those that do, the average claim is $1,200.

Obstetrics. Medical malpractice suits -- and medical malpractice insurance -- have been on the rise for all physicians since the mid-1970s. Obstetricians, however, paid more for professional liability insurance in 1984 than did doctors in any other specialty, according to a report by the American Medical Association.

The result? ``A significant percentage of our members'' have decided to quit delivering babies, says Ken Heland, head of the professional liability department for the American College of Obstetricians and Gynecologists. A survey in 1983 showed 9.1 percent of the college's members had given up obstetrics. A new survey is due out next month, and Mr. Heland expects the number to be much higher. ``We believe access to health care may be threatened by this,'' he says.

Heland cites a number of reasons for spiraling insurance premiums: the number of lawsuits is rising, settlements are higher than ever before, and obstetricians handle some of the most difficult medical cases.

Municipalities. From California to Kentucky, from Massachusetts to Florida, cities and towns either cannot afford to renew their liability insurance or cannot find an insurance company that will write a policy. As a result, many are searching for new ways to protect themselves against lawsuits.

While some communities are uninsured, others have set up programs to insure themselves. One plan, now becoming more popular, is for towns to band together to create their own insurance association, says Stanley Corcoran of the Massachusetts Municipal Association. Each town pays into the association, which invests the money and pays out losses from its funds. Whatever is left over is refunded to the member towns.

Mr. Corcoran warns there must be a cap on liability, however, to protect the association from going bankrupt. Although Massachusetts has a $100,000 limit on tort claims, many other states have no such cap, he says. Cities and towns can no longer rely on the common-law doctrine of governmental immunity, which has been steadily eroded in the courts, he adds.

Many municipalities are also working to reduce the risk that they will be sued. Plainfield, Mass., decided to close its beaches because it couldn't afford lifeguards, Corcoran says. Efforts by other cities to reduce risk include reexamining procedures for hiring and firing and removing hazards in the workplace.