Why You Need Malpractice Insurance To Protect You and Your Business
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Medical malpractice insurance covers legal expenses for medical professionals in case they are sued for causing a patient’s injury or death. If you work in the healthcare industry, you need to consider buying malpractice liability insurance due to the high risk of being sued over a perceived mistake in the performance of your professional duties.
Keep reading to find out what is covered by medical malpractice insurance and how you can obtain it to protect yourself and your assets.
What Is Malpractice Insurance?
Malpractice insurance is a type of professional liability coverage that insures medical professionals against claims of negligence resulting in the injury or death of a patient. For example, it could cover you if you are sued for misdiagnosing a patient, making a surgical mistake or recommending a poor treatment plan based on an improper reading of a patient’s chart.
A 2020 analysis estimated that more than 22,000 hospital patients in the United States die due to preventable medical errors each year. In addition, a 2023 study found that more than 30% of American doctors have been sued at some point in their career.
Even if you did not make any sort of error or omission while treating your patient and a court rules in your favor, you could still have to pay expensive legal fees out of pocket if you do not maintain medical malpractice insurance.
How Does Malpractice Insurance Work?
Medical malpractice insurance policies are generally sold as either claims-made or occurrence policies. A claims-made policy only covers claims that are filed during your policy period. Conversely, an occurrence policy covers claims related to incidents that happened during your policy period regardless of when the claims are filed.
For example, imagine you recently switched to a new insurance provider and are now being sued by the family of a patient of yours who died on the operating table six months ago. In this scenario, your previous insurance carrier would cover the claim if you had an occurrence policy since the patient’s death happened during your coverage period.
However, if you had a claims-made policy, you would not be covered since the claim was filed after your policy ended. You can extend the reporting period of a claims-made policy by purchasing tail insurance, although this typically comes with a high price tag.
Who Needs Malpractice Insurance?
Medical professionals like doctors, nurses, surgeons, physical therapists, optometrists, dentists, pharmacists and more should consider carrying malpractice insurance. In addition, it can be helpful for anyone whose work could reasonably lead to the injury of a client such as a personal trainer or yoga instructor.
Is Malpractice Insurance Required?
Medical professionals are required by law to purchase malpractice insurance in Colorado, Connecticut, Kansas, Massachusetts, Nebraska, New Jersey, Pennsylvania, Rhode Island and Wisconsin. Regardless of what state you live in, the hospital you work at could require you to buy professional liability coverage.
In addition, a few states require doctors to maintain this type of commercial coverage to participate in a patient compensation fund, which is a state-run program that provides excess liability coverage for doctors facing malpractice lawsuits.
Keep in mind that the federal government self-insures against liability claims. As a result, medical professionals that work for the federal government like military doctors do not need to purchase malpractice insurance.
What Does Malpractice Insurance Cover?
Medical professional liability insurance primarily covers legal expenses that stem from a malpractice lawsuit including defense costs, settlements and punitive damages. It can also cover any other damages you may be expected to pay if you lose your case such as a patient’s additional medical costs.
For example, if someone starts choking while you are at a restaurant and a waiter asks if anyone there is a doctor, your malpractice insurance would apply if you stepped in but failed to save the choking person. Keep in mind that your Good Samaritan coverage may come with a sub-limit.
In addition, some policies may come with sexual misconduct liability insurance that covers legal expenses if you are accused of a non-criminal act of sexual misconduct such as making a one-off inappropriate comment to a patient.
What Isn’t Covered?
Your malpractice insurance policy won’t provide coverage if you intentionally harm a patient or are impaired by drugs or alcohol while treating your patient. It also doesn’t cover the destruction or falsification of medical records or any kind of criminal activity.
Likewise, your malpractice insurance coverage may not apply to accusations of criminal sexual misconduct such as sexual assault. In addition, you may need cyber liability insurance to receive coverage for Health Insurance Portability and Accountability Act (HIPAA) violations or other claims that stem from a data breach.
How Much Does Malpractice Insurance Cost?
The primary factors that influence the amount you have to pay for malpractice insurance are your specialty and location. For example, annual premiums can range from $8,274 for an internal medicine specialist in Los Angeles to $226,224 for a surgeon or OB/GYN in Miami, Florida.
Some of the other factors that can play a role in determining your medical malpractice insurance cost include the amount of experience you have in your profession, the coverage limits you select and the number of malpractice claims you have previously filed.
How To Get Malpractice Insurance for Your Business
You should compare commercial insurance quotes using an insurance marketplace like SmartFinancial to find the best coverage for your healthcare business. You can buy medical and nursing malpractice insurance through companies like Geico, Liberty Mutual, Chubb, Gallagher Healthcare, CNA Insurance and more.