A Complete Guide to Malpractice Insurance For Healthcare Professionals
The Purpose Of Malpractice Insurance
Professional liability insurance is a type of insurance that provides protection for professionals for when they make a mistake that people in their occupation wouldn't ordinarily make. The type of policies that health care professional purchase is called malpractice insurance. In the United States we live in a litigious society where lawsuits have become almost commonplace. Health care providers are particularly at risk of this if a patient feels that a physician didn't perform tests they should have, harmed them, caused a worsening of an illness, or the patient died because of something they were perceived to have done.
malpractice insurance policy protects healthcare workers in a few ways. The policy will pay for the legal defense of the healthcare worker. This includes attorney fees and court costs. It also covers the cost of putting together a peer panel which reviews the conduct of the healthcare worker and whether it fell within the norms of professional guidelines. The policy will also cover the cost of any settlement or judgment. The total amount of coverage that will be provided for these is whatever the liability limit is on the policy.
Having a malpractice insurance policy in place gives piece of mind to any healthcare worker. They know that if they are sued they will be protected from facing financial ruin as a result. Even though most healthcare providers don't expect to ever be sued it's important to protect against as this happening just once during a career can be potentially devastating.
The Professions That Need A Malpractice Insurance Policy
There are a number of healthcare workers that need malpractice insurance policies. Examples of this include:
- Physicians and Surgeons
- Dentists and Orthodontists
- Naturopathic Doctors
- Plastic Surgeons
- Physical Therapists
Do I Need A Malpractice Policy If The Medical Facility I Work For Has A Policy?
Many if not most hospitals and medical facilities have malpractice insurance policies that cover everyone who works for them. While you might think that insurance policy adequately protects you it's very likely you need your own policy in order to be truly protected as there are probably gaps that exist in coverage. Employer malpractice policies might also have exclusions that leave you exposed to risks you aren't aware of.
There is also a conflict of interest inherent in any employer based insurance policy. At the end of the day, the insurance company is going to serve the interests of the policyholder which is the medical facility or other types of medical services company rather than the medical professional working for that company. If the liability for a claim can be foisted off on the individual doctor, nurse, or other healthcare workers than that leaves them exposed to a risk of liability that they didn't foresee. By buying your own policy you know that your own insurance company is looking out for your own best interests and no one else's.
The Two Types Of Malpractice Insurance Policies
There are two ways that a malpractice policy covers incidents. The first way, and by far the most common, is on a claims made basis. The other way, on an occurrence basis, is not offered by very many insurance companies in the United States. These mainly differ based on when a claim is filed.
On a claims made policy there are two stipulations for determining if there is coverage. The first is that the policy had to be in force on the date that the alleged incident occurred. The second is that the policy must be active when the file is claimed or else the claim will be denied.
On an occurrence policy the policy also needs to be in force for the date of the claim. However, this type of policy differs from a claims made policy because the claim can be made at any point in time in the future even if the policy has long since lapsed. Not many insurance companies are willing to offer this type of policy because it creates too much rate uncertainty when claims can be made years after a policy is out of force.
If the owner of a claims made policy decides to switch insurance companies they might be able to take and pay for an optional coverage on the policy being canceled which is called either “tail” or “prior acts”. This will allow claims against the policy to be filed and covered even after the policy has canceled, usually up to one year.
The Liability Limit On A Malpractice Insurance Policy
The liability limit on a malpractice insurance policy is the total amount the policy will pay in the event of a claim. In most cases the liability limit on this type of policy starts at $1 million in coverage and can be increased in even $1 million increments from there. There will also be a deductible which is the amount the healthcare worker will need to pay out of pocket in the event there is a claim.
There are two liability limits on a malpractice policy to look at. The first one is the amount the policy will pay out per occurrence. For any one claim the policy will pay out no more than that amount for mounting a legal defense and covering the cost of a settlement or judgment. The other limit is the overall aggregate. This is the total amount the policy will pay in any given one year policy period regardless of the number of claims.
How Much Malpractice Insurance Costs
The costs of a malpractice insurance policies are based on a large number of factors. Chief among them is the medical profession the policyholder is in. It also depends on the state that the policyholder is doing their work in. Someone that is a brain surgeon, of course, will pay higher premiums than a nurse who draws blood in a primary physician's office. One medical profession that tends to be expensive to insure is those who are obstetricians as that profession has experienced a lot of litigation over the years. The cost also depends on the amount of liability on the policy.
For Washington state, someone that performs internal medicine can expect to pay around $10,000 a year for their malpractice insurance policy while a general surgeon would pay about $38,000 a year. An OB/GYN will pay about $55,000 a year. For a doctor in Los Angeles, California the averages are $9,800 a year for internal medicine, $28,000 a year for a general surgeon, and $40,000 a year for an OB/GYN.
Showing the big difference between states, in Montana a doctor in internal medicine will likely pay $14,000 a year, a general surgeon $61,000, and an OB/GYN $70,000. In Dade County, Florida someone in internal medicine will pay $37,000 a year, a general surgeon $151,000, and an OB/GYN $186,000.
Who Sells Malpractice Insurance Policies
Physician-owned insurance companies insure about half of all doctors in the United States. The doctors choose these types of companies because they tend to be more sympathetic to physicians and are less likely to settle a lawsuit because it will save money. When a claim is filed a peer-reviewed committee is formed which looks at the facts of the case and works with the lawyer(s) assigned to the claim. They make their determination based on how defensible the claim is and generally don't settle if they feel the claim doesn't have any merit.
Whichever insurance company a healthcare professional chooses they should make sure the company is fiscally sound and has good claims handling processes. Some insurance carriers offer risk management programs and might offer a discount to any policyholder that participates in it.
A good source of finding out which insurance companies offer malpractice insurance in a state is that state's insurance commissioner's office. They might also be able to offer information on complaints that have been filed against any of the insurance companies. They can also provide the carrier's A.M. Best rating which shows how financially solvent the company is. The rating should be at least A- which shows they have an excellent ability to meet their ongoing financial obligations.