Medical Malpractice Insurance 101

Every healthcare provider worries about being sued.  Not only does having a malpractice lawsuit filed against you mean you may have messed something, better yet someone up, being sued is a high stress situation.  Of course, the best way to protect yourself from liability is to practice with perfection, but as a healthcare provider you must carry malpractice insurance in case of unforeseen circumstances.

In most cases, your employer will offer medical malpractice insurance as part of your employment package.  Employers typically offer adequate coverage so most nurse practitioners won’t need to purchase supplemental plans.  Even if your employer offers medical malpractice insurance when you sign on with the company, it’s important to understand the basics of a malpractice insurance plan.  This way you can evaluate your own plan and determine if it provides you with adequate liability coverage.

What exactly is medical malpractice insurance?

Even the most competent medical providers make mistakes from time to time. Just like you have car insurance to cover costs in case you get into an auto accident, as a health care provider you must have medical malpractice insurance in case you make a mistake in your practice.  Even healthcare providers who do not make mistakes can be sued.  So, even if you practice with the utmost caution, holding malpractice insurance is a must.

If you are sued, potential costs include legal fees, expert witness fees and payments to the patient if a case is lost or settled.  Even if you win the lawsuit, which is the case for most medical providers, the cost of defending yourself is high and this is covered by your insurance policy.

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Am I required to have medical malpractice insurance?

Nearly all states require that healthcare providers carry medical malpractice insurance.  In states where malpractice insurance is not required, most hospitals require liability insurance in order to obtain privileges.  This means that although malpractice insurance may not be mandated by law, it is required as a condition of employment.  Rarely, some healthcare providers go without insurance.  In Florida, for example, about five percent of providers carry no liability coverage.

Who is covered under medical malpractice insurance?

In any medical practice medical providers, other staff such as nurses and medical technicians, and the company itself should be covered through an insurance policy.  In most lawsuits, multiple parties are sued.  For example, a plaintiff may claim that the medical provider made a mistake while also holding the company for which the provider works partially responsible.  All healthcare providers must hold individual malpractice insurance.  Many insurance companies sell malpractice insurance to the company itself while covering non-provider employees as part of the package.

How much does my malpractice insurance policy cover?

Medical malpractice policies outline the most that will be paid for one claim.  This is known as the “individual limit”.  Policies also outline the most that will be paid in and policy year for all claims.  This is known as the “aggregate limit”.  For example, a policy with limits of $1,000,000/ $3,000,000 covers a maximum of one million dollars per claim made and a total of three million for all claims made against the provider during the policy year.

Your state ‘s laws may specify the minimum amount of malpractice insurance you are able to carry.  In some states, this is as low as $100,000/$300,000.  Even if carrying a low limit policy is allowed by your state, this type of plan offers minimal coverage leaving you financially exposed in case of lawsuit.  Most standard medical malpractice policies carry limits of $1,000,000/ $3,000,000.

What is not covered by my medical malpractice insurance policy?

Every malpractice insurance policy includes a list of offenses not covered by the policy.  This list typically includes actions like illegal conduct, sexual misconduct, and hospital records alteration.

How much will medical malpractice insurance cost me?

When you purchase car insurance, the cost of your premium usually depends on your experience as a driver and your driving record.  Medical malpractice insurance does not work this way.  Premiums are usually based on the specialty in which you work and your geographic location. Some insurers take into account the number of hours worked and the type of work done by the provider within the specialty.  Very little to none of your malpractice insurance premium is based on experience as insurers have found that experience is not a good predictor of a provider’s risk of a malpractice lawsuit.

Nearly all employers cover the cost of your individual malpractice insurance plan as part of an employment package.

What other questions do you have about malpractice insurance? 


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