There are more than 22 million workers in the health care industry, according to the most recent data from the U.S. Census Bureau. That includes professionals such as surgeons, doctor’s assistants and health technicians. But no matter how meticulous you are as a health care professional, mistakes can happen, which could lead to a lawsuit filed against you, even if the suit has no merit.
If your business provides health-related services, such as nursing, nutrition and dietary advice, physical therapy, or renting and selling medical equipment, you’ll most likely need medical malpractice insurance. It can help pay for your legal defense in case you are sued for claims of injury or death.
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What Is Medical Malpractice Insurance?
Medical malpractice insurance is a specialized form of business insurance for health care professionals. It’s also called “medical professional errors and omissions insurance.” Medical malpractice insurance covers claims of services that result in a patient’s injury or death.
Claims-made vs. occurrence-based policies
There are two basic types of medical malpractice insurance:
- Claims-made: In this policy type, a claim must occur and be reported while your policy is in effect with your insurance company. Claims-made policies are the most common type of medical malpractice insurance.If you want coverage for a claim that is made after your policy is no longer in effect, you’ll need to pay extra for “tail coverage.” Tail coverage extends your policy for a certain period of time, such as five years after your policy ends.While this option can be expensive (up to three times the amount of your annual premium), it can help cover you for any claims that arise later. It can be a good option if you are switching policies, starting a new position or retiring.
- Occurrence-made: This covers claims that were made during the policy period, regardless of when the claim is made, even after your policy has been canceled. While these types of policies are less prevalent, some insurance companies offer occurrence-made policies. They are generally more expensive than claims-made policies.
What Does Medical Malpractice Insurance Cover?
Medical malpractice insurance covers professionals for claims such as:
- Care-related injuries
- Errors in treatment
- Medication errors
- Misdiagnoses
- Premature discharge from a clinic
- Unnecessary surgery
It covers expenses associated with defending and settling claims, including:
- Arbitration costs
- Attorney’s fees
- Court costs
- Medical damages
- Punitive and compensatory damages
- Settlements
Your medical malpractice policy will cover you up to your policy’s limits. Your policy limits might be written as two numbers, such as $1 million/$3 million. Here’s what those numbers mean:
- $1 million is the maximum amount your insurance company will pay per claim.
- $3 million is the maximum amount your insurance company will pay per policy period.
What Does Medical Malpractice Insurance Not Cover?
Here are some common exclusions to a professional liability insurance policy:
- Alteration of medical records
- Auto accidents
- Criminal acts
- Cyber liability such as a data breach
- Damaged business property
- Employee injuries
- Claims of patient discrimination or abuse
- Lawsuits that you initiate
- Patient accidents
- Sexual misconduct
Who Needs Medical Malpractice Insurance?
Medical professionals such as doctors, home health care providers, nurses and physical therapists may be required to have medical malpractice insurance by:
- Business clients
- Credentialing authorities
- Government contracts
- Healthcare networks (such as clinics and hospitals)
- Health insurance plans
- Hospitals
- Licensing agencies
- State law
Even if you are not required to have medical malpractice insurance, it’s worth considering if your business does one or more of the following:
- Provides care to patients
- Provides care to residents of health care facilities
- Monitors the care of patients
- Rents, sells or maintains medical equipment
Here are examples of professions who could benefit from medical malpractice insurance:
- Acupuncturists
- Counselors
- Dentists
- Licensed practical nurses
- Nurse practitioners
- Nursing students
- Optometrists
- Personal trainers
- Physical therapists
- Physicians
- Physician assistants
- Therapists
- Yoga instructors
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How Much Does Medical Malpractice Insurance Cost?
Nurses can pay less than $100 per year for medical malpractice insurance in some states, according to Trusted Choice, a network of independent insurance agents. But professions with more risk can expect to pay more. Surgeons might pay between $30,000 to $50,000 per year.
The median annual cost of medical malpractice insurance for counselors and therapists is $500 per year, according to Insureon, while the median annual cost for dieticians and nutritionists is $365 per year. The median annual cost for home health aides is $110 per year.
Your medical malpractice insurance costs will depend on several factors:
- Your profession
- Years of experience
- How often you work
- Previous claims filed against you (if any)
- Your location
- Your policy limits
Cost examples of medical malpractice insurance in 2020
Here’s a look at the cost of medical malpractice insurance for three types of medical specialists in different locations within the U.S.
The costs are for policies with limits of $1 million per occurrence and $3 million per year, except in Connecticut ($1 million per occurrence and $3 million per year) and Pennsylvania, which includes patient compensation fund surcharges.
What’s the Difference Between Medical Malpractice Insurance and Professional Liability Insurance?
Medical malpractice insurance is a form of professional liability insurance, also known as errors and omissions insurance. And while these terms might be used interchangeably, there is a key difference.
- Medical malpractice insurance covers your legal costs, including judgments and settlements for claims that you caused a patient’s death or injury.
- Professional liability insurance covers errors that you make in your business activities.
For example, if a patient claims that your treatment resulted in pain or additional medical care, that would fall under your medical malpractice insurance. But if a patient accused you of violating their privacy under the Health Insurance Portability and Accountability Act (HIPAA), that would likely be covered by professional liability insurance.
What’s the Difference Between Medical Malpractice Insurance and General Liability Insurance?
General liability insurance covers injuries and property damage you accidentally cause to others.
Here’s an example to differentiate between the two.
Say you’re a chiropractor who has your own private practice. If a patient slips on a wet floor in your office and gets hurt, their medical expenses are covered under your general liability insurance.
But if a patient claims your chiropractic treatment resulted in injuries, your medical malpractice insurance will cover the cost of your legal defense, including any judgments or settlements.
How to Find the Best Medical Malpractice Insurance
Check to see if your employer already offers medical malpractice insurance
Before you start shopping around for a policy, see if your employer has medical malpractice insurance for its staff. Alternatively, your workplace might offer discounted group insurance.
But even if your workplace offers medical malpractice insurance, you may want to consider getting your own policy. Here are some examples of claims your employer’s policy may not cover:
- Claims filed against you from work at a previous employer
- Claims of one employee against another employee
- Lost wages while you attend claims-related legal proceedings
Figure out how much coverage you need
Medical malpractice insurance policies can range from $100,000 per occurrence and $300,000 per year to $1 million per occurrence and $3 million per year. It’s a good idea to speak with an insurance agent who can help you match the coverage amount to the amount of risk that your profession faces. For example, a surgeon faces more risk of an expensive lawsuit than a dietician.
Some states cap the amount of damages that can be awarded. For example, in California, a medical malpractice case is capped at $350,000 if it does not involve wrongful death. If your state has a cap, you may not need to buy a policy with limits that exceed the cap.
Compare medical malpractice insurance quotes
Get several quotes from different insurance companies to zero in on a good price.
If you already have a business owners policy, make sure you get a quote for how much it will cost to add medical malpractice insurance to your existing policy. It’s often cheaper to bundle coverage types with the same company compared to buying standalone policies from different companies.
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