Medical malpractice insurance is a must for every healthcare provider, regardless of location or specialty. Even the most careful practitioners can find themselves on the receiving end of a lawsuit, resulting in significant legal costs and damage to your reputation. These legal costs often include attorneys' fees, which can be substantial in complex litigation. The right malpractice insurance policy helps protect providers from the financial burdens associated with a malpractice suit.
However, the medical malpractice industry has struggled with outdated technology and business practices, often leading to long quote times and unnecessarily high premiums. Indigo is changing this with AI-powered underwriting, which leads to faster, more accurate quotes. We spoke with Indigo CEO Jared Kaplan to learn more about how medical malpractice coverage works and how this new technology is changing the game for healthcare professionals.
Medical malpractice insurance is a form of professional liability insurance for medical professionals and organizations. It covers costs associated with medical negligence or malpractice claims, including those resulting in patient injury, to protect the provider financially.
Medical malpractice insurance coverage refers to the protection provided to healthcare professionals against legal claims arising from alleged negligence or errors in patient care. It typically includes coverage for legal defense, settlements, and damages, and may vary depending on state law, legal requirements, and available coverage options.
Medical malpractice insurance covers most costs associated with medical malpractice lawsuits. This includes:
This type of insurance applies in cases where providers are accused of medical malpractice or negligence. This can happen when a provider makes an error that results in harm to the patient, or fails to meet the accepted standard of care.
Malpractice coverage typically does not apply in criminal cases or cases of sexual misconduct, although some policies may provide a defense for such claims if they are alleged to be based upon the provision of healthcare services.
So is professional liability the same as malpractice insurance? Medical malpractice coverage is one of many possible types of professional liability insurance.
Professional liability insurance is any policy that protects service professionals from costs associated with lawsuits related to their job. For example, construction contractors have professional liability insurance to protect them financially if anyone gets injured on a construction site. Financial brokers often use errors & omissions insurance, which is another type of professional liability coverage.
The medical industry comes with unique legal and financial concerns. This is why healthcare providers need specialized medical malpractice coverage, rather than a generic liability policy. These policies are specifically designed to insure providers against the unique risks and exposures found in the medical field.
Medical malpractice lawsuits are more common than you might think. Approximately 31% of physicians report that they have been sued at least once in their careers. Each of these lawsuits involves a malpractice claim, highlighting the significant risk physicians face and the importance of having proper insurance coverage.
If you are the target of a malpractice suit, this insurance coverage can provide a financial and legal safety net. Medical malpractice settlements often amount to $250,000 or higher, and legal fees often total 20 to 30% of the final settlement amount. Malpractice insurance handles these costs for you, so you won’t have to cover them out-of-pocket.
Malpractice insurance also ensures that you can hire a qualified defense team, which is particularly important if you are falsely accused. For example, Indigo connects policyholders with specialized legal experts in the event of a claim.
Anyone who provides medical care to patients should have malpractice insurance. This includes all types of physicians, nurses, and physician assistants, as well as specialized providers like physical therapists, dentists, psychologists, and more. Pharmacy professionals should also carry malpractice insurance.
Many individual healthcare providers have their own malpractice insurance policies. Securing your own insurance is important because it ensures you have coverage tailored to your specific needs and circumstances. However, hospitals and healthcare systems also typically have group malpractice coverage options available. These policies cover everyone working within the system, and are necessary for students, volunteers, and administrative staff who don’t have their own malpractice insurance policies.
Medical malpractice insurance falls into two primary categories: claims made vs. occurrence policies. The difference between these two policy types is the timing of the events they cover.
Claims made policies cover medical liability claims that are first made during the policy period. For example, say you commit a medical error in October 2025, but the patient doesn't make a claim until January 2027. Your claims made policy would need to be active in January 2027 to receive coverage, i.e. the date the claim was “made.” If you had a claims made policy in October 2025, but it expired before the patient filed a claim, you would not receive coverage under that policy.
Claims made policies usually come with some options to extend your coverage. For example, many medical professionals purchase prior acts coverage to go with their claims made policy. This extends the coverage for incidents going back to a retroactive date. This way, if someone files a claim right as the policy starts, you’ll still have coverage.
Many medical professionals also purchase tail coverage for legal protection after their claims made policy ends. This additional tail insurance is often necessary when changing practices, moving to a new state, or retiring.
Occurrence policies provide coverage based on when the incident “occurred,” not when the claim was made. As long as you had an active policy when the alleged malpractice or negligence occurred you’ll receive coverage, even if the claim is made long after your coverage expires.
Occurrence policies are typically more expensive than claims made policies, although exact premium amounts vary significantly between policies. The first premium for each policy is determined based on the insurer's assessment of risk and is intended to reserve funds for potential future claims; if the initial premium is not sufficient, additional assessments or charges may be required during the policy term.
So how much is malpractice insurance? Unfortunately, the answer is complicated, as exact costs can vary significantly between policies. For example, malpractice coverage for family physicians tends to range between $5,000 and $15,000 annually, but can be even higher in some locations.
Here are some of the factors that affect the cost of malpractice insurance:
When setting premiums, insurers estimate future losses by analyzing past claims data, predictive models, and assumptions about future risks. This helps them determine the appropriate premium and anticipate the possibility of future reassessments.
During the underwriting process, the insurance company assesses the applicant’s risk level. They do this by reviewing their financial and legal history as well as their practice operations. Then, they use this information to provide a quote. Many risk retention groups use their own assessment models, which can affect premium calculations and financial stability.
Historically, this process has been extremely slow and doesn’t always account for the complexity of modern medical operations. Here’s what Kaplan has to say about the current challenges in the malpractice insurance industry:
“Essentially, when speaking about the status quo, you have two issues. First, it’s just a very slow process. It takes doctors days — if not weeks — to get a quote for medical malpractice insurance. Secondly, I would say underwriting does not leverage the best-in-class technologies that are available today to make the best risk decisions.
"When you look at it, some companies have a tremendous amount of historical data they look at to figure out who’s a good risk and who’s a bad risk. But it’s a completely different thing to understand what may happen in the future because we all know historical results don’t predict the future.
"While underwriting technology is improving, changing the process has been difficult for many insurance providers. “The issue is that when you’re a tanker ship, it’s really hard to turn,” says Kaplan. “You have a lot of bureaucracy. You have a lot of hierarchy. You also have a very large team that has been wired to believe that the status quo works and that an automated process will remove the human element.
"I saw this earlier in my career in small commercial insurance where I’d walk into a big insurance carrier and there’d be 30 underwriters who had been with the company for 20-plus years. They’d have this long application, and we would ask why they need all these questions.
"There was a lot of resistance to removing questions from the application because everyone thought they were really important, when in reality, automated processes take in a lot more information with less work because you don’t ask them to fill out a questionnaire."
Indigo is making the underwriting process more efficient and more accurate with an AI-powered underwriting algorithm. Kaplan explains what makes Indigo’s underwriting process unique:
“At Indigo, we are doing two things: we are automating the process, so it saves a lot of time and energy — making us the easiest platform to do business with.
"Secondly, we recognize there’s about half the space that pays too much money because they’re not getting credit for their underlying risk profile, and there’s two buckets of those customers. One is a customer who has been a very clean account for a very long time and is a great risk. But they’re just paying too much money because they just haven’t sought out what’s available out there.
"The other customers are those that recently had some issue arise. In those cases, everyone freaks out. We know it’s a fluke issue because of the data we’re looking at. So, we take a different approach and look at 2,000 attributes.
"And based upon that information, we determine the risk of a claim in the future and whether they are priced properly for that risk. We just see it a lot differently than other companies in the space.”
Many medical professionals receive malpractice insurance through their employer. Historically, organizations and societies, such as the Massachusetts Medical Society, offered malpractice insurance to their members as an incentive to join. If you’re working as part of a hospital, clinic, or medical group, talk to your medical director and administrative staff to see if you’re covered under their existing policy.
If you’re in private practice or work as an independent contractor, you’ll need to purchase your own individual policy. Many physicians also choose to purchase individual policies in addition to their employer-provided plans for extra coverage.
To purchase malpractice insurance, you’ll need to start by getting a quote from the providers you’re interested in. With Indigo, you can get a quote directly online by providing some basic information about your practice. Many medical providers also work with insurance brokers to compare policy options.
Renewing malpractice insurance is a much faster process that can usually be done online through your provider’s website in just a few minutes. However, it’s essential to renew your policy as soon as possible to prevent any gaps in coverage. Failing to renew on time could leave you unprotected in the event of a lawsuit.
With so many options on the market, you might be wondering how to choose medical malpractice insurance. These insurance providers play an essential role in protecting your finances and your reputation in the event of a lawsuit, so it’s important to choose providers you can trust. Here’s what to keep in mind when selecting your provider and policy type. It’s crucial to understand your policy coverage, including the limits, scope, and applicability, to ensure it aligns with your professional activities and practice needs.
To get started, conduct your own personal insurance audit, and make sure to keep the following points in mind:
Medical malpractice insurance is an investment in your business, but you don't want to pay more than you have to. Look for a provider that offers reasonable pricing for your risk level.
Indigo uses an AI-powered quoting engine to provide more accurate premiums for customers. Kaplan says,
"Just think about all the data that exists in the universe and what may or may not be relatable to whether someone has a claim," says Kaplan. "We're able to gather thousands of attributes, and we're just scratching the surface of what may or may not be correlated.
"At the end of the day, we believe you can come up with a much more accurate representation of how someone should be paying for insurance based upon what their true underlying risk profile looks like. That’s just not possible to do with traditional manual underwriting. You need these technologically advanced processes to get a better answer.
"We currently see pricing in the space to be quite narrow. In many cases, the largest risks are being underpriced because people want the premium. You really want to have a better segmentation process to identify the lowest risk customers. We believe we could do that at a much more accurate level than what's happened in the industry today."
Since Indigo's quoting technology assesses so many data points, it accurately evaluates risk levels. This means that many physicians and healthcare professionals pay less than they would with traditional underwriting.
You'll need to provide some information about your medical practice to get a quote from any malpractice insurance company. However, this process should be straightforward and efficient. Look for an insurance company with seamless quoting, onboarding, and renewal, so you don't have to take too much time away from your patients.
In addition to making quoting more accurate, Indigo is also using AI to improve the customer experience for policyholders. Here's what Kaplan had to say about the process:
"I think, for our purposes, we have two customers. We have the doctor, and we have an insurance broker. And we want to be far away, the easiest company to work with for these two groups.
"That means the submission process has to be easy. The service has to be easy, and the renewal has to be easy. By easy, I mean they should be required to give us limited information.
"Everything should happen in real time with a remarkably high level of satisfaction because the customer expects that. This typically is not a fast-moving space, and everything takes a lot of time. I think we are already positioning ourselves to be the easiest to do business with.
"We have a lot of room for improvement. And we’ll continue to evolve our automation infrastructure as an alternative to manual processes and ensure we can provide pricing and quotes swiftly."
The best medical malpractice providers can help connect you with trusted legal teams in your area in the event of a malpractice suit. A good policy doesn't just cover legal defense but also access to specialized attorneys who understand the complexities of medical malpractice cases. Finding the right lawyer in this overwhelming situation can be challenging, so it’s helpful to have a defense team on standby you know you can trust.
Top malpractice insurance providers like Indigo also offer risk management support to help you prevent claims before they happen. For example, Indigo has a complimentary risk management hotline available to all policyholders.
When choosing any new insurance carrier, check to make sure they are financially reliable. You’ll need to make sure your provider can afford to meet their obligations in the event of a large lawsuit. Financial reliability is crucial because it ensures the insurer can cover the ultimate net loss, including all associated costs beyond just the settlement or judgment amount.
An easy way to tell if an insurance provider is reliable is to check their A.M. Best rating. Ideally, your insurance provider should have a rating of A- or higher.
When evaluating medical malpractice insurance options, consider your policy type carefully to make sure it aligns with your needs. Claims made policies are the most affordable and accessible option, but some high-risk medical professionals might prefer an occurrence policy, as it provides more long-term protection.
If you choose a claims made policy, consider whether you need nose coverage or tail coverage. These add-ons come with an extra cost, but they also mean you won’t lose coverage in between policy periods.
Finally, review all clauses and riders before signing a policy to make sure you’re getting the coverage you need. Pay special attention to the policy's limit for defense costs and settlements, as some policies may cap the amount they will pay and others may provide that costs erode your limit. Understanding your policy limits ensures you have sufficient coverage for both defense expenses and potential settlements. Look for a provider that goes above and beyond with helpful features like cyber liability coverage or incident trigger coverage.
When building a comprehensive business insurance plan, healthcare professionals must make medical malpractice insurance a top priority. As a specialized form of professional liability insurance, malpractice insurance provides essential protection against liability claims that can arise from allegations of medical negligence or errors in patient care. For physicians, nurses, physical therapists, and other medical professionals, this insurance coverage is not just a regulatory requirement in most states—it’s a critical safeguard for your practice and reputation.
Malpractice insurance shields healthcare providers from the financial risks associated with malpractice suits, including legal defense costs, settlements, and potential compensatory damages. Without adequate coverage, a single claim of negligence could threaten the financial stability of your medical practice and even your personal assets.
In addition to protecting individual practitioners, malpractice insurance is a vital component of business insurance for clinics, group practices, and healthcare organizations. It ensures that all members of your team—including other medical professionals—are covered in the event of a liability claim. By integrating medical malpractice insurance into your overall risk management strategy, you can focus on delivering quality care to your patients, knowing that your business is protected against the unpredictable risks of medical practice.
Ultimately, investing in robust malpractice insurance coverage is one of the most effective ways to manage liability, reduce exposure to costly claims, and maintain the long-term health of your healthcare business.
When shopping for insurance policies, it’s helpful to understand the current state of the insurance market. In 2019, the broader insurance market started hardening. A hard insurance market happens when insurers adjust their approach based on recent losses or current events. As a result, premiums go up and policies become scarcer.
While the insurance market is softening somewhat, premiums are still higher than they were through most of the 2010s. This is due to both economic and social inflation driving prices up.
In response to these market conditions, risk retention groups have become more prominent. These are insurance carriers owned by policyholders, often physicians, and operate similarly to mutual companies. Risk retention groups are not admitted carriers, which allows them to avoid certain regulatory burdens and focus on reducing premiums by managing surplus funds effectively.
In the malpractice insurance industry, the hard market is due in part to the rise in nuclear verdicts over the past decade. Nuclear verdicts are very large jury awards, often totaling over $10 million.
As nuclear verdicts become more common, many insurers have increased premiums to offset the risk.
Medical malpractice lawsuits start when a patient files a claim of negligence or medical error. A medical malpractice lawsuit involves a formal legal process where the healthcare provider faces significant financial and reputational risks, making malpractice insurance essential for protection. Then, the accused party must find an attorney. Malpractice insurance covers the attorneys' fees during this time.
Prior to the trial, both parties go through a discovery period, exchanging documents and evidence. Then, both parties will work to see if they can settle the case out of court, perhaps with the assistance of a mediator. If a settlement isn’t possible, the case will proceed to trial.
You may be wondering: do hospitals usually settle out of court? The answer is a resounding yes, as it’s estimated that more than 90% of malpractice claims are settled before going to trial.
When a malpractice case does make it to trial, it can be a lengthy process, sometimes lasting several weeks. Medical malpractice payouts by state vary based on the local legal climate.
As technology changes, the malpractice insurance industry is evolving with it. Specifically, the insurance market is implementing AI technology to address many of the biggest challenges associated with manual underwriting.
In addition to adopting new technologies, some large healthcare organizations are choosing to become self-insured as part of their risk management strategy, allowing them to assume their own risk for insurance claims rather than relying solely on traditional insurance policies.
Indigo CEO Jared Kaplan highlights how AI technology is changing customer interactions:
“I think there’s going to be a massive movement in the next two to three years where companies will take current service models and leverage them with artificial intelligence. That means, in many cases, replacing the first line with a non-human who can do a better job because they know the answers to every question, and they can do it with both an [empathetic] and static style. At the end of the day, customers are happy.
"Creating training models to best answer those types of questions and how you respond is a very straightforward process. Customers get the answers they need, and you should be able to do business in literally any way the customer wants to do business.
"Whether that’s email, text or chat, you can embed these technologies to do it much better. That is already happening in the marketplace today, and we won’t be an exception to this trend.
"We hope to employ these technologies so that no matter who needs us, for whatever reason, we can do a great job — a much better job than a human would do. If you don’t adapt, I think you’re going to get left behind because that’s the new age of customer service.”
At Indigo, we’re using AI to change the entire process of obtaining malpractice insurance, from the initial application to customer support to renewal. The difference is “No Wait,” as Indigo’s quoting engine can assess risk levels and generate a quote in just a few minutes. While established providers are known for traditional options such as tail and nose coverage, Indigo sets itself apart by leveraging advanced technology for a faster, more efficient experience.
Kaplan further breaks down how Indigo is using AI technology to take the delays and frustration out of getting malpractice insurance:
“We are using AI and machine learning tools to automate much of the submission, underwriting, and risk segmentation process while reducing the burden on our customers to do business with us. We are able to write insurance without an application or loss runs.
"We can process unstructured data and provide real-time bindable quotes with a single data point (Net Provider ID) and identify opportunities for material customer savings. That’s a huge game changer. It’s just inefficient when someone’s filling out a 15-page application, sometimes with a pencil, and you’ve got a traditional underwriter who is looking at it and trying to figure out risk.
"At Indigo, we can process unstructured data, and you could even send us an email you last sent to some other company, and we could take all the data we need out of it. There are no waiting days or weeks for a quote.
"We can do it all in real time and identify opportunities for customer savings using alternative data and machine learning technologies to discover who is paying too much for the underlying risk. That’s our whole secret sauce — automation and AI machine learning. And that is where the space is headed.”
In the event of a med mal claim, Indigo partners with local claims defense attorneys to defend you, allowing you to continue focusing on what you do best — looking after your patients.
It’s time for a more customized medical malpractice insurance experience that provides a high level of customer satisfaction and customer support tools.
Request your quote today.
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