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A specific form of professional liability insurance known as medical malpractice insurance covers doctors' liabilities resulting from disputed treatments that cause a patient's harm or death.
The majority of medical systems and virtually all states mandate medical liability insurance as a prerequisite for practice.
Malpractice insurance is often offered by conventional insurance companies or by medical risk retention groups, which are cooperative associations of healthcare professionals formed to offer liability insurance (sometimes sponsored by state medical societies).
Additionally, some sizable healthcare systems could be "self-insured"; rather than buying commercial insurance, a medical liability trust fund is established and utilized to cover the cost of defending against malpractice claims and any judgements that may be rendered against its doctors.
What Does Medical Malpractice Insurance Cover?
Who Is Covered by Medical Malpractice Insurance?
Medical Practices Any kind of medical practice from doctor’s offices to OBGYN to pediatrics offices to hospitals will be covered under a Medical Malpractice policy should they be sued for mistakes made in the provision of medical services.
Medical Professionals Doctors, nurses, and other medical professionals that are making diagnoses or performing medical procedures are protected by this policy. Defense costs are either reimbursed or paid directly by the insurance company for defense.
Do I Need Medical Malpractice Insurance?
Medical Malpractice Insurance comes in handy if your business:
What Are the Limits of Medical Malpractice Insurance?
Every policy of this type has different amounts of policy limits. There are several restrictions that all medical professionals considering this type of coverage should be familiar with.
The individual limit is the amount that the insurance company will pay for a single claim. This typically only applies to the ultimate settlement or award amount, not the cost of counsel.
The aggregate limit is the total amount that a policy will pay during an established period of time (typically one year). This can cover multiple claims.
These two limits are often written together so that a policy with a $1,000,000 individual limit and a $3,000,000 aggregate limit would be displayed as a $1M/$3M Medical Malpractice Insurance policy.
There can also be limits on the amount that is paid towards the cost of legal counsel. Since most policies simply provide their policyholders with an in-house lawyer, however, these limits are not typical.
How Much Does Medical Malpractice Insurance Cost?
The cost can vary significantly based on a number of issues. Policy premiums are often based on a medical professional’s previous record of malpractice cases, the geographic area he or she is practicing in, and the particular field that he or she practices in.
It’s also possible for factors, such as length of employment and the history of the employer to be considered when computing premiums.
From here, premiums are then based on the total amount and type of coverage purchased. Like all insurance, higher coverage limits tend to come with higher premiums.
What are Claims Made and Occurrence Policies?
Medical malpractice insurance is almost always a claims-made insurance policy. What this means is that a claim must be made during a policy term while it is still active, and must not be before the retroactive date on the declarations page.
An occurrence policy means that claims can only be made for incidents that happen within the policy period.
What is the difference between Medical Malpractice and Professional Indemnity?
Professional Indemnity insurance is only designed to pay for financial losses that you cause to your customers. If a claim is made regarding bodily injury or property damage, this is not going to be covered.
However, Medical Malpractice will certainly cover losses pertaining to injury or illness caused by your mistakes made in the provision of medical services.
Is Medical Malpractice Insurance mandatory?
Depending on the state, Medical Malpractice is required by law with differing minimum limits. It is recommended to carry at least a $1 million liability limit or more depending on your services and asset size.