Understanding Medical Malpractice Insurance

Mistakes happen in every profession, but in the medical field, the stakes are higher. When physicians or other healthcare providers make mistakes, their patients may be at risk of adverse outcomes, from unexpected complications to permanent disability or even loss of life. In these cases, patients or their loved ones may seek financial compensation by filing a lawsuit against the providers involved in their care. In this way, understanding medical malpractice insurance is key for all medical professionals.

What Is Medical Malpractice Insurance?

Medical malpractice insurance is a type of professional liability insurance that helps shield physicians and other medical professionals from medical malpractice claims. It helps cover the potentially high costs of defending yourself from lawsuits, and if you're found liable, it also helps pay for court-awarded damages.

Beyond the malpractice claims themselves, the policy will typically also provide coverage for administrative proceedings brought by a regulatory or governmental agency that oversees licensing and clinical privileges.

Understanding medical malpractice insurance is crucial for physicians. Keep reading for details about what it covers and why it’s important.

What Does Malpractice Insurance Cover?

Medical malpractice insurance offers coverage for various costs related to defending yourself from medical malpractice claims. The specific costs covered can vary from one policy to another, but typically include:

1. Lawyer Fees

Lawyers charge anywhere from $100 to $500 per hour for the time they spend working on a case.

2. Expert Witness Fees

Expert witnesses play a vital role in a medical malpractice defense. They’re physicians hired to examine the medical records and provide opinions regarding the standard of care.

3. Arbitration Costs

Arbitration is an option for resolving disputes out of court. Arbitrators charge hourly or daily rates for the time they spend on a case.

4. Settlement Costs

Some medical malpractice cases are settled outside of court, with the patient receiving a negotiated amount of financial compensation.

5. Compensatory Damages

Courts may award damages to compensate patients for their actual costs, such as past and future medical bills, lost wages, and reduced earning capacity.

6. Punitive Damages

In some cases, punitive damages can be  awarded on top of compensatory damages to punish a physician who is found to have committed gross negligence.

7. Additional Coverages

Some insurers offer other types of coverage, such as cyber liability coverage and risk management advice to help physicians avoid lawsuits.

While medical malpractice insurance helps cover a wide variety of costs, no insurance policy covers everything. Coverage is capped based on the applicable limits of a given policy. Common exclusions include claims resulting from intentional acts or sexual misconduct or practicing without proper licensure. Other exclusions may apply depending on the specific terms of a given policy. Check the policy for details.

Why Do I Need Medical Malpractice Insurance?

Having the right medical malpractice coverage in place helps physicians protect their practice and personal assets in the event of a lawsuit. It ensures they’re not personally responsible for paying for damages awarded to a patient that are covered within the limits of the insurance policy.

Even the best physicians face the threat of malpractice lawsuits. Nationally, about 2% of physicians are sued in a given year, according to recent research from the American Medical Association. Nearly one-third of all physicians have been sued at some point in their careers. Among physicians aged 55 and older, 46.8% have faced a malpractice claim.

The costs of defending and settling medical malpractice lawsuits can be significant. According to industry data, the average cost of a closed claim hovers around $400,000. For higher-risk specialties like obstetrics or neurology, the average cost is closer to $1 million.

Beyond financial protection, medical malpractice insurance helps physicians safeguard their professional reputations. It provides the necessary resources and support to defend yourself against claims of malpractice.

Who Needs Medical Malpractice Insurance?

Many physicians are required to have medical malpractice insurance. In some states, physicians must carry at least a minimum level of malpractice coverage to be allowed to see patients. If there are no state requirements, hospitals and other facilities may require insurance. Some health plans also require physicians who participate in their provider networks to have malpractice coverage.

Even if you’re not required to have medical malpractice insurance, it likely makes sense to carry this coverage. That’s especially true for physicians in specialities that face a higher risk of malpractice lawsuits.

According to data from the American Medical Association, obstetrician-gynecologists are the most likely physician group to face a malpractice claim, with 62.4% of OB-GYNs reporting being sued at some point in their careers. General surgeons are the second-most likely, with 59.3% being sued in their careers to date. Orthopedic surgeons, emergency medicine physicians, and radiologists also face an above-average risk of malpractice claims.

We've written an entire blog to help physicians choose the best medical professional liability insurance coverage for them.

How Much Does Medical Malpractice Insurance Cost?

Medical malpractice insurance rates can vary significantly from one doctor to another. Insurers consider many factors when calculating the cost for a quote, including the following:

1. Physicians Specialty

The likelihood of being sued for medical malpractice varies across specialties. Physicians in higher-risk specialties, such as OB-GYN or general surgery, can expect to pay higher insurance rates.

2. Geographic Location

Costs can vary widely from state to state. State law affects how easily a patient can file a lawsuit and the amount of compensation they can expect to receive. Insurers consider the total claims paid in an area when pricing policies.

3. Work Schedule

Physicians who work part-time in clinical settings may pay lower premiums than physicians who see patients on a full-time basis.

4. Years of Experience

The likelihood of facing a medical malpractice lawsuit increases over time, so some insurers offer lower rates to new physicians who are in their first year of practice.

5. Coverage Limits

Policies set limits on the amount of coverage per medical malpractice claim and per year. Generally, the higher the coverage limit, the higher the premium.

6. Personal Claims History

Research shows that physicians who have a prior paid medical malpractice claim have a higher risk of future claims. For that reason, physicians with past claims may pay higher premiums.

There are many other factors that affect an individual physician’s risk of facing a medical malpractice claim.

At Indigo, we believe that having access to large volumes of data empowers better decision-making. Indigo leverages robust data sets and  artificial intelligence in its proprietary underwriting model to analyze thousands of data points to create personalized quotes. Indigo rewards physicians that practice good medicine with bigger potential savings.

How Can Indigo Support You?

Indigo is a new medical malpractice insurance platform that uses innovative technology to streamline the traditional malpractice insurance process. Now, physicians and medical groups can receive customized pricing that’s in line with their true medical malpractice risk.

In the event of a medical malpractice 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.

Get a quote today.

Disclaimer: This article is provided for informational purposes only. This article is not intended to provide, and should not be relied on for, legal advice. Consult your legal counsel for advice with respect to any particular legal matter referenced in this article and otherwise.