What Is Malpractice Insurance?

Malpractice insurance is a type of professional liability insurance purchased by healthcare professionals. This insurance coverage protects healthcare providers against patients who file suits against them under the complaint that they were harmed by the professional's negligence or intentionally harmful treatment decisions. Malpractice insurance also covers the death of a patient.

Key Takeaways

  • Malpractice insurance is a type of professional liability insurance intended to cover healthcare professionals.
  • Patients can file lawsuits against healthcare professionals seeking damages for medical negligence that resulted in further health problems or death.
  • Studies show that medical negligence is the third leading cause of death in the United States, so more likely than not, a healthcare professional will need malpractice insurance.
  • Malpractice insurance can be obtained through a private insurer, through an employer, or through organizations, such as medical risk retention groups (RRGs).
  • The two basic types of professional liability insurance are claims-made policies or occurrence policies.
  • Legal costs, punitive damages, and medical damages are all covered under malpractice insurance.

Understanding Malpractice Insurance

Most medical doctors will need malpractice insurance sometime during their professional career, and for good reason. A study by Johns Hopkins University and included by the Center for Disease Control and Prevention (CDC) on their list of leading causes of death in the U.S. list medical negligence as the third leading cause of death in the United States, behind heart disease and cancer.

Medical negligence can happen during diagnosis, during treatment, or as part of the advice given for treatment after an illness. Approximately 250,000 deaths in the U.S. arise from medical errors every year.

Some studies show that more than 17,000 malpractice lawsuits are brought to healthcare professionals every year in the United States. An average U.S. doctor can expect to have a malpractice lawsuit brought against them once every seven years. This underlines the importance of having malpractice insurance for a healthcare professional.

States require that medical professionals have current malpractice coverage to work in hospitals and other medical facilities. Medical malpractice insurance premiums are usually based on the physician's specialty and geographic location, not on claims experience. This means that even if a physician has never been sued, they can end up paying extremely high premiums. The premiums can be high because of such factors as the amount of coverage needed, claims severity, claims frequency, location of practice, and laws in the area.

Types of Malpractice Insurance

There are many options for procuring malpractice insurance. In the most basic form, an insurance policy can be purchased for an individual or group by a private insurer. Individual or group policies can also be purchased by a medical risk retention group (RRG). An RRG is a group of medical professionals organized to provide malpractice insurance. Another option for obtaining malpractice insurance is under the coverage plan of an employer, such as a hospital.

Individuals that work as medical professionals under the government do not need to obtain malpractice insurance as the federal government insures against liability claims. Insurance can often also be obtained through state and local agencies if the situation deems it necessary.

The two types of policies that a healthcare professional can purchase are a claims-made policy or an occurrence policy. A claims-made policy only covers claims if the policy was in effect when the treatment occurred and when the lawsuit was made. An occurrence policy covers any claim that was made on a treatment that occurred while the policy was in effect, even if the policy has since expired.

The types of costs covered under a malpractice policy are wide. They include all legal fees, such as lawyer fees, settlement and arbitration costs, medical damages, and punitive damages.

Proving a Malpractice Lawsuit

In a medical malpractice lawsuit, the plaintiff needs to prove a medical professional violated the general standard of care of a patient, as defined by the medical community. In order to be successful in a medical malpractice lawsuit, three things generally need to happen:

  1. The plaintiff's attorney must prove there was a breach of medical protocol that resulted in a practitioner choosing a different course of action than a colleague would have taken.
  2. The medical professional causes physical or emotional injury.
  3. There must be sufficient evidence proving the medical professional caused the damage.