What Does Malpractice Insurance Cost?

July 16, 2019 •
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When you buy a home, you purchase homeowners’ insurance to protect yourself against fluke accidents like storms, earthquakes, or break-ins. When you buy a car, you purchase auto insurance for car accidents and damage. The same reasoning applies to medical professionals when they begin practicing medicine.

Malpractice insurance for physicians, nurses, and other hospital personnel help when an unforeseen accident occurs or when an unforeseen lawsuit shows up on their desk.

Many professionals at the beginning of their career think malpractice suits only affect doctors who screw up. However, in a study done by Medscape in 2017, more than half of physicians charged with a malpractice lawsuit were “very surprised” by the suit. Having a Malpractice policy for physicians and other healthcare professionals is a must-have, and the costs associated vary widely based on a number of factors.

 

Costs at a Glance: Physicians

One reason why it’s difficult to pin down how much malpractice insurance costs is because of the volatility of prices across the medical professional field. A survey published in the American Medical Association offered data on malpractice insurance premiums from 2008 to 2017. It accounted for three different practices—OB/GYN, general surgery, and internal medicine—and their premiums across seven different states.

Here are some findings from the survey:

  • Geography, specifically what state you practice in, is a huge factor in premium cost
  • Over the last ten years prices have been stable

 

Costs at a Glance: Physician Assistant

Physician assistants must complete a 2-3 year masters level education at an accredited PA program. Because of their extensive education and training, they are responsible for carrying out similar responsibilities to a physician. And although they consult with the doctor before ordering tests and treatment, they are held equally accountable for any mistakes made.

The medical malpractice insurance cost for physician assistants can be anywhere in the thousands. While this could be less than the average physician’s insurance premium, it is similar relative to the salary difference of PAs and MDs.

 

Costs at a Glance: Nurses

Nurses aren’t exempt from the anxiety and headache that is a malpractice suit. In fact, in specialties such as neonatal, critical-care, and OB nursing, the rates of malpractice lawsuits are some of the highest.

The most common reasons to file for malpractice against a nurse are:

  • Infrequent monitoring of the patient’s condition
  • Offering an incorrect diagnosis
  • Improper assessment
  • Medication issues or mix-ups
  • Incorrect treatment and treatment plans

To protect yourself against these, nurses need a malpractice insurance policy. Thankfully, the rates are significantly cheaper, and nurses only pay a fraction of what physicians pay because the hospital typically comes with some form of coverage already. Plus, nurses earn far less money than physicians, making them less of a target. Regardless of their level of risk, it is still highly advised for them to get a malpractice insurance policy.

 

Costs at a Glance: Students

Clinicals are a natural progression in a medical student’s career where they gain real-world experience working in a hospital. While students are the least likely to be sued (mainly because they’re usually in debt anyway and a judge is unlikely to find fault in a student), they can be pulled into group medical malpractice lawsuits.

To gain peace of mind, students can pay a small premium to have some form of malpractice insurance.

 

Factors that Affect Price

As you can see, the cost of malpractice insurance varies widely depending on the occupation.

This makes sense. The cost of insurance follows the same hierarchy of responsibility for a patient and the same hierarchy of annual salary.

It should also be noted that within each occupation, there are a number of other factors that affect the price.

  • Specialty – One major determinant of the premium cost is your specialty. OB/GYNs and surgeons take the cake in terms of the number of lawsuits against them and the amount of payout. Pediatricians and psychiatrists lie on the opposite side of the spectrum; they’re sued the least.
  • Location – Where you practice plays another significant role in determining how much your premium will be. Practicing in New York or Michigan will have you paying about three times more than those in Wisconsin or Minnesota, on average.
  • Desired Coverage – Malpractice insurance covers medical personnel up to a certain payout. If you receive multiple lawsuits and the payout extends beyond your policy, you are liable to cover the remaining damages. To stay safe, many professionals choose a policy that covers up to $1M or more.

 

Malpractice Insurance: Is it Right For You?

When someone asks, “What does malpractice insurance cost?” it must be put into the right context. Although malpractice insurance premiums can seem expensive, the cost of not having insurance is even higher. This means that one standard lawsuit without having liability insurance can cost as much as purchasing coverage for 20 years. This risk is never worth the few extra dollars saved each year.

 

Sources:
  1. American Medical Association. Policy Research Perspectives https://www.ama-assn.org/sites/ama-assn.org/files/corp/media-browser/public/government/advocacy/policy-research-perspective-liability-insurance-premiums.pdf
  2. MedPage Today. By the Numbers: Malpractice Hits Nurses, Too https://www.medpagetoday.com/publichealthpolicy/by-the-numbers/69392
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