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Medical malpractice insurance is a specialized type of professional liability coverage for medical professionals and is legally required for physicians operating in some states.
Medical malpractice insurance can cover physical and personal injury to clients resulting from negligence, professional errors, misrepresentations, and omissions of information.
Malpractice insurance is considered a fixed cost and is usually quite expensive due to the high level of risk involved in providing medical services.
Your profession can dictate the price. Surgeons can pay tens of thousands of dollars per year for medical malpractice, while other healthcare professionals may pay a few hundred dollars annually.
Malpractice insurance comes in two forms: claims-made policies or occurrence policies. Occurrence policies are more comprehensive but also cost more.
Not all health professionals require malpractice insurance. Some may only need professional liability insurance.
We recommend using an online quote tool to find policies for your specific business and get same-day coverage from top providers.
With the average malpractice settlement?exceeding $300,000, it’s extremely important for licensed healthcare professionals to carry adequate medical malpractice insurance.
This type of coverage protects you from liability in a wide range of scenarios, ensuring that you don’t have to pay any claims out of your own pocket. Although medical malpractice insurance is important, it’s also a bit confusing. We created this guide to help you make sense of your options.
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What is malpractice insurance?
Medical malpractice insurance is a specialized type of professional liability insurance for licensed healthcare providers that can cover claims related to personal injury or physical injury as a result of negligence or malpractice.
The main purpose of medical malpractice coverage is to?protect you and your practice?from patient lawsuits.
Although this type of insurance is usually associated with doctors and physicians, it’s often available to other types of licensed medical professionals, including:
Dentists
Nurse practitioners
Physician assistants
Paramedics, and more
Malpractice insurance vs professional liability insurance
People often wonder, “Is medical malpractice insurance the same as professional liability insurance?” The short answer is no, it covers more scenarios.
Standard liability coverage protects business owners against lawsuits relating to personal injury resulting from errors in their work, bad advice, or omissions of important information. The term “personal injury” typically refers to non-physical injuries, such as emotional or a psychological injury. Standard errors and omissions insurance protects a business from claims of negligence or failure to perform professional services as contracted
Medical malpractice insurance is different from standard liability insurance as it goes a step further and can also protect against physical or bodily injury to clients.
For example, if a surgeon accidentally cuts into the bladder while making an incision in the pelvis, medical malpractice insurance could cover the surgeon against resulting lawsuits.
What does malpractice insurance cover?
Typical medical malpractice insurance policies will cover claims relating to the following scenarios:
Medical damage
Compensatory damages
Punitive damages
Arbitration costs
Attorneys’ fees
Court costs
What does malpractice insurance not cover?
Like other types of business insurance, medical malpractice insurance doesn’t cover any claims arising out of criminal acts. Insurers also deny claims related to:
Sexual misconduct toward patients or clients
Making inappropriate changes to a patient’s medical records
There are two different types of medical malpractice policies available:
Occurrence policy: An occurrence policy covers claims for events that occurred when the policy was active, even if it has since been canceled. For example, if you have an active policy from 2020 to 2026, your malpractice insurance company would cover a claim filed in 2030 for an event that occurred in 2024 when the policy was active.
Claims-made policy:
A claims-made policy covers you based on when the claim is filed, not when the event occurred. For example, if a patient has hernia surgery in 2023 and displays signs of complications in 2025, a claims-made policy would cover it only if the policy is still active when the patient files the claim.
If you are wondering which type of policy is better:
An occurrence policy gives you more protection than a claims-made policy, as it continues to protect you long after some claim events occur. The downside is that occurrence policies cost more.
If the cost of occurrence coverage is a concern, consider purchasing claims-made insurance and buying tail coverage if you have to cancel the policy. Tail coverage allows you to extend the reporting period of your policy, giving you additional protection after it is canceled.
Here are the pros and cons of each policy type:
Claims-made policy pros
Provides coverage based on when someone files a claim
Less expensive than occurrence policies
Covers prior acts as long as you had active coverage when the event occurred
Claims-made policy cons
Premiums increase until the policy matures, which may negate some cost savings
Tail coverage is necessary if you cancel your policy and want coverage for prior acts later on
Total coverage limit doesn’t reset each year, leaving less coverage available once a claim is paid out
Occurrence policy pros
Total coverage limit resets every year
Premiums often stay the same unless your risk profile changes
Easy to switch to another policy if needed
Occurrence policy cons
More expensive than claims-made policies
Who needs malpractice insurance?
Usually, only physicians need malpractice insurance. In some states, physicians are legally required to have malpractice insurance to be able to operate in the state.
In many cases, most other medical professionals may only need a professional liability insurance plan. While worker’s compensation insurance will cover the medical costs of employees, medical malpractice will go further and avoid any legal tangles should a patient incur an illness or injury.
That said, medical professionals that could benefit from having medical malpractice insurance include:
Physicians
Nurse practitioners
Physician assistants
Nurses
Dentists
Psychologists
Optometrists
Physical therapists
Paramedics
Legal requirements by state
Certain states have specific requirements for physicians, for example:
California only requires coverage for physicians involved in performing outpatient surgery.
All physicians are required to have malpractice insurance in the following states:
Wisconsin, Rhode Island, Massachusetts, Connecticut, Kansas, Colorado, and New Jersey.
Physicians are required to have a minimum level of coverage to participate in certain state-funded programs in the following states:
Pennsylvania, New Mexico, Louisiana, New York, Nebraska, and Indiana.
That said, physicians employed by federal medical facilities are typically exempt from needing malpractice insurance thanks to The?Federal Tort Claims Act?which allows patients to file claims against the federal government instead of directly against the physician.
If you aren’t sure if you need malpractice insurance, a licensed insurance agent can help point you in the right direction and tell you what coverage is right for you.
Medical malpractice insurance is extremely expensive and can cost between tens of thousands to a few hundred thousand dollars. This number can depend on several factors such as increases in the average settlement amount and the average number of claims filed per year.
On another note, medical professionals with higher levels of risk typically pay more for their malpractice insurance. For example, a neurosurgeon who operates on the brain and spinal cord requires much more coverage than a healthcare professional working in a telemetry unit.
Here are several factors that determine the cost of malpractice insurance:
Profession:
Some professions have higher levels of risk than others. For example, obstetricians manage high-risk pregnancies and difficult deliveries, resulting in an increased risk of complications.
Years of experience:
Inexperienced medical professionals typically pay more than professionals with decades of experience.
Work frequency:?
The more often you work, the more opportunities there are for something to go wrong. Therefore, full-time healthcare professionals typically pay more than providers who do some occasional moonlighting.
Previous claims (if any):
If you file a claim, you can expect your premiums to increase accordingly.
Location:
Healthcare professionals who practice in cities with high costs of living typically pay more for their insurance.
Policy limits:
The higher the limit on your policy, the more you have to pay for continued protection.
To see how much malpractice insurance could cost you, use our online tool to view pricing and find a great policy for your business.
Over the past several years malpractice insurance costs have increased dramatically.
The table below shows how the average premium for three selected specialties has increased from 2017 to 2022:
Specialty
2017 Premium
2022 Premium
Percent Change
General surgery
$101,583
$116,055
0.142
Internal medicine
$29,897
$30,175
0.00093
Obstetrics and Gynecology
$169,129
$169,473
0.0002
All data comes from the Annual Rate Survey issue of the Medical Liability Monitor. Averages are based on the rates for physicians in seven states.*
According to?Medical Economics, the insurance industry often bases prices on the general state of the economy, meaning some insurance providers have been forced to increase their rates to keep up with rising operating costs in recent years.
For example, between 2021 and 2022, the?average malpractice premium?increased by 2.5%. Some areas saw significant increases, while others stayed the same or had slight decreases.
What is required to prove a medical malpractice lawsuit?
As a medical practitioner, it’s important to know what types of claims can be made against you.
To prove a medical malpractice lawsuit, a claim must have the following elements:
1
Breach of medical protocol
The patient must prove that you deviated from the accepted standard of care
See MoreSee Less
2
Injury by a medical professional
The plaintiff must prove that a medical professional caused the injury
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3
Evidence of damage
There must be some evidence of damage, such as proof of reduced earning potential, medical bills from treatments related to the injury, or testimony from expert witnesses regarding the patient’s condition
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FAQ: Medical malpractice insurance
Do doctors have to pay their own malpractice insurance?
It depends on your employment situation. Doctors who operate their own practices typically have to purchase their own medical malpractice insurance, this is part of their wider business insurance polices If you work for a hospital, there’s a good chance your employer will pay your insurance premiums.
What other coverage options are available for medical malpractice insurance?
When you start a new job, you have two options for coverage. The first is to purchase and pay for your own malpractice policy. Purchasing an individual policy gives you the most comprehensive coverage, as you get to maintain complete control over the terms.
The second option is to accept coverage from your employer. Medical practices, hospitals, and other medical facilities typically have group policies in place to protect licensed healthcare professionals against malpractice claims. Although this coverage option is easier on your wallet, a group policy may not protect you in all circumstances, so be sure to review the terms carefully.
What is the difference between medical malpractice and general liability insurance?
General liability covers physical injuries resulting from accidents at your place of work. However, it won’t cover injuries that are a direct result of your business practice. On the other hand, malpractice insurance can cover injuries that arise as a direct result of your business operations.
Is malpractice insurance a fixed cost?
Yes. Malpractice insurance is one of the largest fixed costs for any medical practice.
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