Medical malpractice insurance, often called Medical Professional Liability Insurance, is a must for every physician, regardless of the stage of their career.
Just like when shopping for other types of insurance, it’s important to understand why you need it and the benefits it offers. Here are some of the most common questions about medical malpractice insurance.
What doctors should know about medical malpractice insurance
What, exactly, is medical malpractice insurance?
Medical malpractice insurance is a type of professional insurance designed and recommended for medical professionals, including physicians and nurses. The Insurance Information Institute defines it as “a specialized type of professional liability insurance that covers physician liability arising from disputed services that result in a patient's injury or death.”
Malpractice insurance is required in almost every state as well as most medical systems to practice.There are two types: claims-made and occurrence-based.
Claims-made covers any incidents that occur while the policy is in place. On the other hand, occurrence-based provides coverage for any incident that occurred while the policy was in place, which means that the date the claim is filed is irrelevant.
Why do I need medical malpractice insurance?
The reality is that more than half of doctors will face at least one malpractice suit throughout their careers. Even when doctors win these suits, defending them is expensive.
Fighting these suits comes with high costs, including legal fees, witness fees, and other expenses. If a case is lost or otherwise settled, there’s the extra cost of the payment. An American Medical Association study found that all in all, the average cost of a suit can be well over $54,000.
What does medical malpractice insurance cover?
Medical malpractice insurance covers several of the expenses that come with defending or settling malpractice suits, including those listed above. In addition, it pays damages if you’re found liable.
While policies vary, standard coverage includes:
- Attorneys’ fees
- Court costs
- Arbitration costs
- Settlement costs
- Punitive and compensatory damages
- Medical damages
It’s important to note that it does not cover any liability you face that stems from sexual misconduct, criminal acts, or inappropriate record alteration.
How do I purchase medical malpractice insurance?
When it comes to getting medical malpractice insurance, doctors typically have access to it in one of three ways:
- An individual or group policy that is purchased from a traditional private insurer;
- An individual or group policy that is obtained through a medical risk retention group, which is an organization of medical professionals that provide liability insurance; or
- Coverage that is provided as part of a policy held by an employer, such as a hospital.
Like with any insurance, it’s in your best interest to shop around to find the coverage that best fits your unique situation.
How much medical malpractice insurance do I need – and what will it cost?
There’s no one-size-fits-all answer when it comes to how much medical malpractice insurance a doctor needs. A good rule of thumb is to look at what your peers are getting and purchase a similar amount.
This answer also varies by state: Laws regarding the levels of malpractice insurance a doctor is required to carry vary greatly in each state. For instance, in Colorado, a physician needs to have a minimum of $1 million per incident and a $3 million aggregate limit. In Kansas, on the other hand, the law requires that physicians maintain only a $200,000 per claim limit and a $600,000 aggregate limit.
There are several other factors that have nothing to do with the law, including your specialty and location. On average, however, doctors pay an average of around $7,500 per year for coverage, and it typically works out to just over 3% of their income.
Some specialties do call for higher rates, depending on the risk associated with them. The higher the risk, the higher the rates: OB/GYNs can expect over $100,000 per year and surgeons can expect up to $50,000 per year. Less risky specialties often pay between $4,000 and $12,000 per year.
What do I need to ask my employer about medical malpractice insurance?
There are several things to take into consideration when looking into this type of insurance – and a number of them are important to ask potential employers when discussing benefits.
Some questions to consider include:
- What type of policy is it, claims-made or occurrence-based? If it’s claims-made, follow the question up with another about who pays for tail coverage after you’ve left their employ.
- Who pays for the policy?
- How are you covered? Will you be on a shared limits basis or will you have an individual limit?
- Is coverage limited to your scope and duty as an employee? If so, you may consider getting extra coverage. Doing so will protect you if you provide medical advice or help to anyone outside of your employer.
- Do you have consent to settle? This is especially important, as it gives you a say in the handling of your case and allows you to play a role in your defense.
Medical malpractice insurance is essential for physicians and other healthcare providers. Make sure you understand the details of your policy so that you can feel confidently covered.
This material is for informational purposes only and is not intended to provide financial, legal, tax, nor any other professional recommendations or advice.
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