Physicians are human, and even the smartest and most qualified professionals can make a mistake. And any physician can be sued for negligence or malpractice at any time, whether or not they have made a mistake.
Defending a malpractice suit is expensive, even if you win. Defense costs will include attorney and expert witness fees, payment of damages if you lose, and other expenses. Providers often win malpractice cases, but the expenses they incurred to defend the case will likely be unrecoverable.
Medical malpractice insurance, or medical professional liability insurance, is a type of insurance purchased by health care professionals. It covers doctors and other health care providers for liability claims arising from negligent or intentionally harmful treatment. Medical malpractice insurance will usually not provide coverage for negligence due to illegal conduct, sexual improprieties, factual misrepresentations on the application for insurance, hospital or lab administration, or medical records alteration.
Most health care providers need medical malpractice insurance. Nearly all states require that physicians have this coverage, and even if the state does not require it, providers will need medical malpractice insurance in order to get privileges to see patients at a hospital.
Physicians usually purchase medical malpractice insurance from a commercial insurance company or a physician-owned company. They must buy it individually or through their group practice or corporate entity. Medical professional liability insurance should be obtained for the physician, the entity (corporation, LLC, partnership, etc.), and any employees.
Medical malpractice insurance does not work like auto insurance, which is “experience rated,” meaning premiums are based on the insured person’s driving experience. Malpractice premiums are based on the physician’s specialty and geographic location, not his or her own claims experience. Even if a physician has never been sued, he or she can end up paying extremely high premiums if the specialty requires high amounts of coverage or has high claims severity and frequency. The location of the practice and laws in the area also have an impact on malpractice insurance premiums.
Medical professional liability insurance provides coverage for up to certain limits. Most policies specify an individual limit (the most that will be paid for any one claim) and an aggregate limit (the most that will be paid in any policy year for all claims). So if your policy has limits of $1,000,000/$3,000,000, this means it will pay a maximum of $1 million per claim and $3 million for all claims during a policy term. Health care providers can choose policy limits that fit their needs.
There are two types of medical professional liability policies: claims-made policies and occurrence policies. Both types of policies are very complex. Physicians need to know how each one works and pays claims, and then purchase the one that works best for their specialty and needs.
Health care providers must select a financially strong insurance company that will be around for the life of their practice. An insurance company’s financial rating is an effective predictor of its strength and longevity. Your medical malpractice insurance company should have a financial rating of A- or better. In addition, find out how long the insurer has been in business and how long it has been operating in your state.
Medical malpractice insurance is very important for all health care providers, and also very complicated with a lot of variations. Physicians need to understand their policy and the implications of making changes to it over time. Before purchasing any malpractice insurance, compare policies and companies, read and understand the terms, and make an informed decision.
