How Much Malpractice Insurance Do Doctors Carry and What Factors Affect It

Doctors typically carry between $1 million and $5 million in malpractice insurance coverage, although some may opt for higher limits.

The cost of malpractice insurance varies widely depending on factors such as the doctor's specialty, years of experience, and location.

In high-risk specialties like surgery, doctors may pay up to 10 times more for malpractice insurance than those in lower-risk fields like pediatrics.

The type of practice also plays a role, with hospital-employed doctors often paying less than those in private practice.

Professional liability insurance for doctors comes in two basic forms: occurrence or claims-made. The majority of policies available are claims-made, but a few companies offer occurrence policies.

Claims-made policies are cheaper upfront, with the first-year premium often ranging from 10% to 30% of the mature rate. After that, the premium increases each year for a period of 3 to 5 years until it reaches the mature rate.

Occurrence policies provide lifetime coverage for incidents that occurred while the policy was in effect, regardless of when the claim is filed. This means that if you have an occurrence-type policy in effect for a particular year, the policy covers you for claims filed years later, even if you no longer have insurance with that carrier.

Here's a quick comparison of the two types of policies:

Policies set limits on the amount of coverage per medical malpractice claim and per year, with higher limits often coming with higher premiums.

You'll want to consider what coverage limits make sense for your practice, as this will impact your premium costs.

Typically, medical malpractice insurance covers various costs related to defending yourself from medical malpractice claims, but the specific costs covered can vary from one policy to another.

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Claims-Made Policies are the most common type of policy available today, making up the overwhelming majority of policies in the market. They only provide coverage for incidents that occurred and were reported while you are insured with that carrier.

Both the incident and the filing of the claim must happen while the policy is in effect. This means that if you drop a claims-made policy, you are not covered for any suits filed later unless you pay for tail coverage.

Tail coverage is expensive, often costing three times the amount of an annual premium. It's essential to be insured for any claims that could arise later.

Claims-made policies have some important limitations, but they can also provide valuable protection for professionals. If you're considering a claims-made policy, make sure you understand the terms and conditions, including the need for tail coverage in certain situations.

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Policy limits are a crucial aspect of medical malpractice insurance. Most policies offer limits ranging from $100,000 to $300,000 and $1 million to $3 million.

Anderson advises that limits should be based on your geographical area and specialty. You want to have limits that are comparable to what other physicians in your area have.

Some states, like California, Florida, and Texas, have caps on damages, so you may not need limits as high as elsewhere. This means you can save money on premiums.

Policy coverage specifies what incidents are covered, so be sure your insurance covers your full scope of clinical activities. This includes any procedures or treatments you offer.

If you're a practice owner or shareholder, verify that the coverage applies to your professional corporation and employees. You may also want to determine if these limits are shared by all or apply to each person individually.

In some cases, you may want to consider locum tenens coverage, especially if you're in solo practice or a small practice. Many policies include such coverage for 30 to 120 days annually, with no additional premium.

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Specialties like obstetrics and emergency medicine face higher premiums due to their high-risk nature.

The state where you practice also plays a significant role in determining your malpractice insurance costs. California, New York, and Florida typically see higher premiums.

Employment type can also impact your premiums, with full-time professionals generally paying more than part-time workers.

Policy type and limits can also affect your costs, with claims-made policies and higher policy limits increasing your premiums.

Here are some key factors to consider when evaluating your malpractice insurance costs:

Some insurers offer additional coverages to complement medical malpractice insurance. These can include cyber liability coverage to protect against data breaches and other online threats.

Cyber liability coverage can provide financial protection in the event of a data breach or cyber attack, helping to mitigate the costs of notifying patients and responding to the incident.

Risk management advice is also available from some insurers, which can help physicians avoid lawsuits by providing guidance on best practices and procedures. This can be particularly useful for new or inexperienced practitioners.

While additional coverages can provide valuable protection, it's essential to review the policy details to understand what is and isn't covered.

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Doctors who work for hospitals typically have their malpractice insurance premiums paid by their employer. This is a common practice in the medical industry.

Hospitals usually cover the costs of malpractice insurance for their employees, which can be a significant expense. This is one of the benefits of working as a hospital employee.

Doctors who own their own practices, on the other hand, are usually responsible for paying their own malpractice insurance premiums. This can be a significant financial burden.

Medical professionals who work for the federal government, such as those at the U.S. Department of Veterans Affairs, often don't need to purchase malpractice insurance. The federal government typically provides coverage for its employees.

If this caught your attention, see: Federal Tort Claims Act Malpractice Insurance

Assessing your risk management needs is crucial in determining the right medical malpractice insurance coverage for you. According to recent research from the American Medical Association, about 2% of physicians are sued in a given year, and nearly one-third of all physicians have been sued at some point in their careers.

High-risk specialties like obstetrics or surgery may require higher limits and specialized coverage to ensure protection against potential malpractice lawsuits. For example, the average cost of a closed claim in higher-risk specialties like obstetrics or neurology hovers around $1 million.

Even physicians in lower-risk specialties should consider their individual risk factors, such as the number of patients they see and the complexity of their cases. The American Medical Association reports that 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.

Ultimately, the right insurance coverage will depend on your individual circumstances and the level of risk you're willing to take on. According to industry data, the average cost of a closed claim is around $400,000, so it's essential to carefully assess your risk management needs to ensure you have adequate protection in place.