All types of industries use Professional Liability insurance to protect against errors and omissions while rendering services. Doctors, nurses and other medical professionals also need such protection in our litigious world since most physicians in the United States encounter at least one medical malpractice lawsuit during their career.
In this post we’ll cover everything you need to know about medical malpractice and Medical Malpractice insurance, which is also known as Medical Professional Liability insurance or Healthcare Liability insurance.
What is Medical Malpractice?
Medical malpractice is professional negligence by a medical professional, which results in the injury or death of a patient. An example of medical malpractice would be when a doctor wrongly diagnoses a patient resulting in the wrong treatment, which is detrimental to the patient’s health.
Even if you are just a medical student, you could still be held liable for negligence since you are able to treat a patient under the watch of a licensed health care professional.
What does Medical Malpractice insurance cover?
Every healthcare professional needs Medical Malpractice insurance to protect against complaints and lawsuits alleging injury to a patient. It covers legal costs, punitive damages, and medical damages.
Medical Malpractice insurance covers acts and accidental omissions. This means, a medical professional could be liable for care they provide, such as a surgery, but they could also make a mistake through an undiagnosed illness or problem, which then would be classified as an omission.
Most Medical Malpractice insurance policies include some Cyber Liability coverage as an endorsement – typically $50,000 to $100,000. It covers losses associated with data breach, stolen patient information, Health Insurance Portability Accountability Act (HIPAA) violations, and medical billing errors. However, this endorsement doesn’t provide sufficient protection against all cyber incidents, so it is highly recommended to purchase a separate stand-alone Cyber policy up to $1 million if you are a solo practitioner.
What is not covered by Medical Malpractice insurance?
Medical Malpractice policy does not cover sexual misconduct, criminal acts, and changing of medical records without permission.
Types of Medical Malpractice insurance
Occurrence-made vs Claims-made Policies
There are two basic types of Medical Malpractice insurance: occurrence and claims-made policies.
Occurrence policies cover incidents when they occur regardless whether the coverage is still in effect or not. For example, a surgeon uses a sponge during surgery, and accidentally leaves it in the patient, which is not discovered until years later when the patient starts having problems as a result. Since this policy covers you even in the past, typically it will be more expensive than claims-made policies.
In addition to higher cost, there’s another downside too. If the insurance company that issued you the occurrence policy went out of business, you will be left without coverage. To avoid this issue you may want to consider purchasing a claims-made policy instead.
Claims-made insurance only covers incidents that occur while the policy is in effect. If you have an interruption in your Medical Malpractice coverage – because, for example, you decide to close your practice and move to another state – you have to purchase “tail-coverage” on top of your claims-made insurance. The cost of “tail-coverage” is usually two times the premium, which can be very expensive. But, most insurance carriers will give you free “tail-coverage” for retirement, disability or death.
How much does Medical Malpractice insurance cost?
Medical Malpractice insurance cost varies depending on the type of policy you are purchasing, your medical profession, the number of years of experience you have as a medical professional, how often you practice, if there are previous liability claims filed against you, and the location of your practice.
For illustration purposes, the cost of Medical Malpractice for a surgeon in California can be $30,000 to $50,000 per year, while a dietician in Pennsylvania may pay $365 per year.
Medical Malpractice policy limits
Medical malpractice insurance coverage limits are similar to what you may see on your personal Auto insurance policy. Medical Malpractice limits break down into two parts:
Per-occurrence limit – A per-occurrence coverage limit refers to the maximum amount that an insurance provider is willing to cover for one specific claim.
Annual aggregate limit – An annual aggregate limit represents the overall sum that the insurance company will cover for all claims within a specified timeframe.
The most common limits of liability for a medical malpractice insurance policy is $1,000,000 per occurrence and $3,000,000 aggregate. This can vary by state, and some hospitals have a minimum requirement.
As an example, let’s assume your per-occurrence limit is $500,000 and your annual aggregate limit is $1 million. If you have 2 claims during your policy year – one for $400,000 and the second claim for $600,000 – then your policy’s per-occurrence limit will cover the first claim (since it’s below your $500,000 limit), but it will only cover $500,000 of the second claim leaving you on the hook for $100,000 for the second claim. Simultaneously, your 2 claims also exhausted your $1 million annual aggregate policy limit with the $500,000 plus $500,000 payments per claim.
In short, evaluate the liability limits you may need in your medical profession, as well as estimate the number of claims you might face in a year to make sure your business is not left with a large amount of out-of-pocket expense. However, if you have enough savings, you could lower your policy limits and save money on your Medical Malpractice coverage.
Takeaways
Medical Malpractice insurance is essential for healthcare professionals. It provides financial protection in case of a lawsuit. Medical Malpractice insurance covers various expenses, including legal costs like lawyer fees, settlement expenses, medical damages, and punitive damages. It aims to protect professionals from financial liabilities associated with claims of medical negligence.
Since Medical Malpractice insurance can be expensive and complex, yet your ability to practice depends on adequate coverage, it is important to work with your insurance advisor to find the optimal policy for your practice. Your advisor can also help you evaluate multiple Medical Malpractice insurance options and consider bundling coverage types with the same insurance company to get a discount. If you are employed, check if your employer offers Medical Malpractice insurance. If it doesn’t, or you need a second opinion to enhance your coverage, contact Monte Shields at monte.shields@hilbgroup.com.