Medical Malpractice Insurance Explained
Experienced professionals in the healthcare industry are well aware of medical malpractice, and most have the appropriate coverage for their work.
However, if you are starting your career or education in the healthcare industry, you may not be fully aware of medical malpractice and its consequences. Hence, you may learn the hard way if you disregard medical malpractice insurance.
So, let’s draw a clear picture of malpractice insurance in the healthcare industry and discuss what it is, who needs it, its costs, coverage, and other important aspects.
What Is Medical Malpractice Insurance?
Medical malpractice insurance is categorized as professional liability insurance, providing coverage to healthcare professionals against medical negligence, malpractice, and injury claims. It protects them from their patients’ liability claims.
Often known as medical liability insurance, or “Med Mal,” this type of insurance may even provide healthcare professionals with an attorney if their medical malpractice case goes to court.
There are two main types of medical malpractice policies, which we will discuss later in this article.
Who Needs Medical Malpractice Insurance Coverage?
It’s obvious why medical malpractice insurance is required for doctors and surgeons. However, plenty of other healthcare and fitness professionals need it too. This is one of the most serious downsides of this industry. An attractive salary for medical professionals is a big plus but you need to find a way to protect your own interests if you decide to take this career path.
Here are a few common professionals who require medical malpractice coverage.
Medical malpractice insurance for nurse practitioners is quite common. Nurse practitioners are responsible for diagnosing health problems, analyzing test results, and administering medications and treatments.
Any of their key responsibilities may result in a malpractice claim, and this is why they need medical malpractice coverage.
Physical therapists are movement experts who develop treatment plans, prescribe exercises, and help people with disabilities. Their job requires them to push their patients to certain limits, which can easily result in an injury claim, which is why they need medical malpractice coverage.
Licensed Practical Nurses (LPNs)
LPNs have duties like collecting blood, changing bandages, and reporting patient concerns to doctors and registered nurses. There are thousands of things that can go wrong on their job, and they require nurse medical malpractice insurance to avoid claims and lawsuits.
No yoga instructors would want a student to get injured during their yoga class. However, injuries can still happen due to various unpredictable circumstances or a student’s pre-existing condition or prior injury. This is why malpractice coverage is essential for them.
Similar to yoga instructors, personal trainers and experts in the fitness industry also conduct classes where clients are at risk of sustaining an injury. In case of the client’s injury claim, medical malpractice coverage will cover all the expenses.
Physician assistants are collaborative physicians with versatile healthcare responsibilities that make them almost as liable as any typical physician. They’re required to have some form of malpractice insurance for medical assistants to overcome potential malpractice claims and lawsuits.
Anesthesiology is a complex field of evaluating, monitoring, and supervising patients before, during, and after surgeries. Anesthesiologists are responsible for administering anesthesia, which can go wrong easily and result in a medical malpractice claim and lawsuit, which is why they require coverage.
Registered Nurses (RNs)
Registered nurses also require medical malpractice insurance because they assess patients and administer medications and treatments that carry considerable risk of error, injury, and malpractice.
Optometrists are eye care professionals, and since their specialty concerns such a sensitive organ, anything may go wrong and result in serious consequences. They require malpractice insurance to cover potential liabilities of their profession.
Nursing Students and More
Even though students are not professionals and are always supervised, malpractice insurance for medical students is not uncommon. It’s essential for nursing students, surgical students, and other medical students who experience hands-on practice during their senior years. The coverage protects them from malpractice or injury claims.
Types of Malpractice Insurance
Professionals in the healthcare industry have plenty of options for procuring malpractice insurance. The simplest way to do so is to purchase an individual or group insurance policy from a private insurance provider.
There is also a medical risk retention group, a group of healthcare professionals who offer malpractice insurance.
Alternatively, the employer’s coverage plan (e.g., a hospital) may also provide malpractice insurance.
Moreover, local and state agencies may also provide insurance coverage for medical malpractice, depending on the situation.
On the other hand, an excellent perk of working as a healthcare professional under the government is that you don’t need to purchase malpractice insurance. The federal government insures you against any malpractice and liability claims.
Regardless of the source, when healthcare professionals consider procuring malpractice insurance, they have two options.
- Claims-Made Policy
This policy covers a malpractice claim that is filed during the policy term regardless of when the incident occurred.
- Occurrence Policy
This policy covers malpractice claims that occurred during the policy term, regardless of when the claim is reported to the insurance provider.
How Much Does Medical Malpractice Insurance Cost?
Of course, the medical malpractice insurance rate for an occurrence policy is higher than a claims-made policy. This is simply because the occurrence policy doesn’t have a limit on the time a claim must be reported.
Medical malpractice insurance costs depend on several things like:
- Professional Field or Specialty
Naturally, a neurosurgeon will pay substantially higher malpractice insurance costs than a certified nursing assistant (CNA) or a medical student.
Medical malpractice insurance rates vary by state.
- Hours Worked
How often you work also affects insurance costs. The more you work, the more you pay for insurance because you have a higher chance of errors, malpractice, or injury.
- History of Claims and Losses
Similar to any insurance, if you have a history of malpractice claims and losses, your insurance costs will rise because you present a higher claims risk.
Other factors, like policy limits, the competition among insurers in your area, etc., affect the cost of medical malpractice insurance.
The difference in insurance costs can be substantial depending on these factors.
For example, a Certified Registered Nurse Anesthetist (CRNA) may pay more than $1,000 per year, whereas a nursing student may pay less than $20 per year.
Medical Malpractice in the Different States
Federal law doesn’t require healthcare professionals to have malpractice insurance in most states. However, a few states make it compulsory for doctors to maintain a minimum level of malpractice insurance.
Medical malpractice insurance cost by state can vary depending on the rules and regulations of the state you practice in.
This is because of many factors, including:
Statute of Limitations
A statute of limitations determines the maximum amount of time within which legal proceedings have to be initiated. This period varies from state to state, and it also depends on the type of injury or malpractice that occurred.
Tort reforms refer to changes in the civil justice system to limit medical malpractice costs, prevent medical errors, and ensure that patients injured due to negligence get fair compensation. These reforms differ by state. Additionally, they impact the average cost of medical malpractice insurance.
A damage cap is the limit of the award given to a patient who wins a malpractice case, varying from state to state. Some states like California have a damage cap of around $250,000, whereas others like Mississippi and South Dakota cap at around $500,000.
Moreover, some states like New York and DC have no damage cap at all, which means there is no limit to how much payout can be awarded to a claimant. Currently, 30 states have a damage cap.
Other factors can also affect your medical malpractice insurance costs, including legislative activity and insurance competition. For example, in Florida, medical malpractice insurance rates have steadily decreased over the years because of an increase in insurer competition and tort reforms.
What Does Medical Malpractice Insurance Cover?
Since medical malpractice insurance covers legal claims that result from malpractice and negligence, almost all insurers provide the insured party with an attorney for court proceedings.
Typically, an insurer will cover the following medical malpractice costs and damages.
- Attorney Fees and Court Costs: the legal representative fees and the court costs that come with a malpractice lawsuit.
- Arbitration Costs: the cost of arbitration, which is a private form of settlement.
- Settlement Costs: the costs of any settlements made as an alternative to a medical malpractice trial.
- Punitive and Compensatory Damages: if you are found guilty of medical malpractice, the insurer will cover the punitive damages in addition to compensatory damages awarded to the plaintiff.
- Medical Damages: the cost of medical malpractice damages like pain and suffering, reduced quality of life, and medical bills.
Some costs and damages are not covered by medical malpractice insurers, such as liability resulting from criminal acts, sexual misconduct, and alteration of medical records.
Proving a Malpractice Lawsuit
A medical malpractice lawsuit requires that the plaintiff proves that the defendant (healthcare professional) violated the general standard of care. The standard of care is a framework of quality defined and practiced by the overall healthcare community.
To win a medical malpractice case in court, the plaintiff and their attorney must prove a breach of medical protocol took place.
To achieve this, a claimant needs to prove that:
- A doctor-patient relationship existed
- The healthcare professional was negligent
- The doctor’s negligence caused the physical or emotional injury
- The injury led to specific damages for which the claimant should be compensated
Which Companies Offer This Type of Insurance?
As mentioned earlier, there are plenty of malpractice insurance providers in the US, including private medical malpractice insurance companies and medical risk retention groups (RRGs). In addition, local and state governments may provide liability protection for medical employees.
Below are the top 10 medical malpractice insurance companies in the US by market share.
- Berkshire Hathaway Group
- Doctors Co Group
- CNA Insurance Group
- Coverys Group
- Proassurance Corp Group
- MCIC Vermont
- MagMutual Insurance Group
- Norcal Group
- Liberty Mutual Group
- MMIC Group
Medical malpractice insurance is a practical and effective way for healthcare professionals to protect themselves from allegations of medical malpractice. Most importantly, it covers all the legal expenses that can reach more than tens of thousands of dollars.
Healthcare professionals are humans too, and there is no telling when or how they may make mistakes that can result in a costly malpractice lawsuit.
Whether you are a yoga instructor, nursing student, or an experienced surgeon, you should always consider getting appropriate medical malpractice insurance coverage in your state for financial protection.
What Type of Insurance Is Malpractice?
Malpractice insurance is professional liability insurance that typically covers negligence, malpractice, and injury claims.
Do Doctors Pay For Their Own Malpractice Insurance?
Yes and no. Doctors may pay for their own malpractice insurance, or it may be provided by their employer or the government.
Malpractice insurance is not mandatory by federal law for doctors practicing in America. However, some state laws make it compulsory for certain medical professionals. Additionally, doctors working for the government get free malpractice coverage from the federal government.
What Is the Best Medical Malpractice Insurance?
The best medical malpractice insurance for a professional depends on many factors, including their field or specialty, location of practice, work frequency, etc. According to the Investopedia rating, State Volunteer Mutual Insurance Company is considered the best for doctors, and the Nurses Service Organization is the best for nurses.
Is Professional Liability the Same as Medical Malpractice?
Partly. Professional liability refers to abstract risks and liabilities, such as errors and omissions in many professions and businesses, whereas medical malpractice is just one type of professional liability. Therefore, all medical malpractice can be categorized under professional liability; however, not all professional liability can be categorized under medical malpractice.