Professionals are expected to perform their services properly. Clients and patients assume someone with a professional designation has the knowledge and resources to get the job done right. If errors happen, professional liability insurance is what prevents a professional from paying for claims out of pocket.
Malpractice insurance is a professional liability insurance policy for those in the healthcare profession. This includes doctors, surgeons, nurses, physical therapists and specialists. Malpractice insurance pays claims when patients assert that a healthcare professional harmed them in some way, due to either negligence or harmful treatment.
While professional liability insurance can apply to a variety of professions, malpractice insurance is the type of professional liability insurance reserved for doctors and other healthcare specialists.
While malpractice insurance is not required by federal law, many states require doctors to carry malpractice insurance. Others in the healthcare industry may choose to get malpractice insurance to protect themselves from potentially costly claims and lawsuits from patients.
Depending on which medical profession you’re in, you can get a malpractice policy to cover your risk. There are two types of malpractice policies. Both cover the same things; the difference is how that coverage is applied in relation to when the claim is made.
Claims-made coverage requires the policy to be active at the time the claim is made. A healthcare provider who had a lapse in coverage could still add a retroactive date of coverage.
For example, suppose a doctor accidentally had a policy lapse and didn’t have coverage from Oct. 1 through Dec. 31. In that case, they could get a policy starting Jan. 1 with a retroactive coverage date beginning Oct. 1. This would provide the needed coverage for the period when they were uninsured. Retroactive dates require an added premium, but it is often worth it to ensure the coverage is in place.
Additionally, a claims-made policy might have an extended reporting period: for example, six months after the policy’s lapse date. It would cover claims made during the policy’s effective period, but reported after the policy lapses.
Avoid gaps in insurance that could leave you at risk for costly claims.
A per-occurrence policy is more expensive because it allows for a claim to be made anytime, whether or not the policy is active at the time of the claim, as long as the date that the claim-related activity occurred was during the coverage period.
For example, if a policy has coverage from Jan. 1 to Dec. 31, 2019, a claim could be made on April 1, 2022, as long as the incident regarding the claim happened in 2019 during the coverage period.
Sometimes patients do not make claims immediately after an incident because they are unaware of the problem. They might only be informed of an error in practice in a follow-up with another provider, thus creating a malpractice claim.
Malpractice insurance covers the mistakes that a medical professional may make during regular business operations. Claims might have to do with misdiagnosis, surgical errors, medication errors, childbirth-related injuries, and other types of mistakes made by medical professionals. Some HIPAA violations are also covered.
|What malpractice insurance covers||What malpractice insurance doesn’t cover|
|Defense, expert witness, legal, arbitration and settlement costs||Intentional wrongdoing|
|Punitive and medical damages||Illegal acts|
Malpractice insurance won’t cover claims arising from sexual misconduct or physical abuse. However, if the claims are determined to be unfounded, the insurance will pay for the defense of the claim.
Malpractice costs vary widely depending on each medical practice and profession. A policy for a nurse costs less than a policy for a surgeon. Since medical mistakes often lead to settlements in the hundreds of thousands if not millions of dollars, malpractice insurance tends to be expensive. General practitioners’ policies average about $7,500 per policy year. Surgeons often pay much more, averaging between $30,000 and $50,000 per year. Nurses pay less, with policies that can be lower than $100 per year.
The range of costs reflects the risk each profession has. Nurses are less likely to be sued than the doctor who oversees the nurse. Thus, there is less risk. However, nurses could still be named in a lawsuit and aren’t covered by a doctor’s malpractice policy.
Basic malpractice insurance may not be enough. Remember that claims could result in settlements of millions of dollars. How does a healthcare provider determine the right amount of insurance to get?
First, understand that policies come in various coverage amounts. The smaller policies start with $100,000 to $300,000 in coverage. This might be enough for a nurse or physical therapist, but most doctors need more. A doctor should have a minimum of $1 million in coverage, but even that could be inadequate.
To make sure you have the right amount of coverage, research the prevailing limits in your area for your profession or specialty. You should have those limits at a minimum. While some will buy even higher coverage, keep in mind that if you have more coverage than anyone else, you become a deep-pocket target in a lawsuit that names multiple defendants. Additionally, some states do cap awards, so you might not need to extend coverage beyond the award limits.
Talk to others in your profession who have dealt with claims to understand how much coverage you realistically need.
You can purchase individual or group policies from a private insurance carrier. Medical risk retention groups can also provide coverage at a discounted rate to those in the group. Some employers have a policy in force, say for the entire hospital. This may cover some of the risks for individuals, but confirm with HR to ensure that you have the coverage you need. Most doctors and specialists will have their own policy to protect their interests as a separate entity from the hospital or medical group they work with.
When shopping for insurance, compare prices among different providers to make sure you get the best coverage for the best price. Remember to compare policies apples-to-apples for each quote you get, meaning that each one has the same coverage limits. See if a deductible applies and, if so, how much that is.
A patient can file a claim at any time; sometimes claims are merely made out of frustration and vindictiveness. Some are outright fraudulent. To get a settlement or a judgment from the doctor or their insurance carrier, the plaintiff must prove malpractice occurred.
To prove the case, the plaintiff needs to demonstrate that the doctor or other medical provider violated the general standard of care of the patient. This standard of care is an industry-approved level of care and protocol. The plaintiff and their attorney must prove a breach in protocol, prove that the error caused physical or emotional injury, and provide evidence that the medical professional caused it.
When someone questions your professional conduct, the result is often scrutiny and investigation into the incident and your regular professional practices. The lawsuit begins with the patient becoming a plaintiff in the courts. The initial lawsuit is filed and gets a docket number. Then, the healthcare professional is served a copy of the complaint and given a chance to respond.
Throughout the lawsuit, the healthcare provider contacts their malpractice insurance provider to obtain legal counsel to investigate and defend the healthcare worker. Many times, a malpractice lawsuit is settled before it is heard in a courtroom. If it does go to court, the malpractice insurance may pay for expert witnesses to testify on the healthcare worker’s behalf.
After both sides plead their case, a ruling is made. If the healthcare worker is found guilty, the malpractice insurance pays the claim up to the policy’s limits. If the judgment is for more than the insurance limit, the healthcare worker may owe the plaintiff the difference.
Negligence and malpractice are similar, but have a crucial difference. Negligence revolves around someone failing to exercise the same care that any other reasonable person would exercise in a similar situation. Malpractice is a specific type of negligence. It refers to negligence made by a licensed medical provider who fails to provide service or services to meet a required standard of care. In other words, malpractice involves negligence where the professional should know better based on their education and industry standards.
These are the most common examples of medical malpractice:
A person can be sued at any time for any reason. Most employer policies are tailored to cover the employer and not the individual license you carry. This means that if you are personally named in a lawsuit, you need your own malpractice coverage. For instance, a doctor’s malpractice policy will not cover the individual nurses he or she oversees if they are specifically named in a lawsuit.
When you have your own malpractice insurance, you have your own legal defense to wholly protect your interests and license. This isn’t always the case if you rely on an employer’s policy to provide protection.
The best general liability insurance covers third-party claims of injury and/or property damage. While a malpractice claim is one of third-party injury, the cause of injury is what makes it eligible for coverage under the general liability policy. General liability is for incidental injuries resulting from business operations, like slip-and-fall accidents. Malpractice injuries are the result of professional errors. If you are in need of general liability or professional insurance, consider The Hartford or Chubb. Learn more in our review of The Hartford and our Chubb review.