A single mistake or act of negligence by a health care professional can have very serious ramifications on a patient’s health or even their life. Medical professionals handle countless patients throughout their careers, so the risk of potential lawsuits remains at a constant high. As such, it is crucial for any business that employs medical professionals to obtain Medical Malpractice Insurance.

What is Medical Malpractice Insurance? 

Medical Malpractice Insurance is a type of professional liability insurance that protects licensed health care professionals against claims of medical negligence and wrongful practices. This includes patient claims of bodily injury, medical expenses, and property damage. One wrong diagnosis, one surgical error, or even one prescription error is enough to put a business in danger of a serious claim. Medical Malpractice Insurance can help a business stay on its feet during the resulting lawsuit. 

Even if you do everything according to proper procedure, defending yourself against claims of perceived negligence can cost your business thousands of dollars. Medical Malpractice Insurance covers the cost of defending lawsuits related to such claims. In some cases, this insurance coverage will provide the funds for your business to hire a lawyer. In other instances, the insurance company will provide their own lawyers to represent your business. 

Medical Malpractice Insurance is vital for anyone who practices medicine or treats patients, but specific requirements vary depending on your state. For instance, some states legally require physicians and other health care professionals to obtain Medical Malpractice Insurance. However, the liability risks in this industry are so great that physicians rarely practice without Medical Malpractice Insurance—even if their state does not require it. 

Example:

• You fail to carefully review your dental patient’s medical history, which points out her severe allergy to penicillin. After performing her dental procedure, you prescribe an oral penicillin antibiotic to prevent infection. The patient suffers a serious allergic reaction that requires medical attention. She sues your dental office for negligence. Your Medical Malpractice Insurance would cover the medical damages and the cost of defending this lawsuit. 

What does Medical Malpractice Insurance cover? 

Medical Malpractice Insurance covers bodily injury, property damage, and liability for personal injury. In addition, Medical Malpractice Insurance covers the cost of defending lawsuits related to these medical malpractice claims. This includes attorneys’ fees and court costs, arbitration costs, settlement costs, punitive and compensatory damages, and medical damages. 

There are several ways your business may be held liable for claims of medical malpractice. These include but are not limited to the following: 

• Failing to correctly diagnose a patient 
• Misreading or ignoring laboratory results
• Performing surgical errors
• Performing unnecessary surgery
• Prescribing improper medication
• Anesthesia errors
• Disregarding patient history 
• Failing to order the correct testing 
• Patient infection stemming from premises 

Example: 

• After reviewing your patient’s symptoms, you diagnose her with the flu. It is later discovered that the flu-like symptoms were due to Lyme disease. Because of the misdiagnosis, the patient was not treated early enough, and the infection spread to her joints and nervous system. She sues your medical practice. Your insurer would provide funds to defend yourself against this claim.

Some medical malpractice policies provide coverage for vicarious liability, which covers acts committed by others. This coverage is important if your business employs medical practitioners that are independent contractors. As the employer, you may be liable for errors they make that cause injury to patients.

Who needs Medical Malpractice Insurance? 

Medical Malpractice Insurance is essential for any business or individual who provides health care services. For instance, this coverage is particularly crucial for physicians, nurses, dentists, optometrists, therapists, chiropractors, plastic surgeons, pharmacists, psychologists, physical therapists, physician assistants, and other health care professionals. Examples of some at-risk businesses include: 

• Hospitals 
• Medical clinics
• Plastic surgery centers
• Weight loss clinics
• Dentistry offices
• Health care groups
• Nursing homes 
• Pharmacies

While many receive coverage as an employee benefit, there are several health care professionals who would benefit from purchasing Medical Malpractice Insurance independently. For instance, self-employed physicians, part-time health care professionals, and those who practice in multiple states must often obtain coverage on their own.

This is also the case for health care professionals who engage in telemedicine, moonlighting, or locum tenens work. For instance, a physician may have Medical Malpractice Insurance through his or her job, but this coverage may not necessarily extend to locum tenens work or temporary clinical assignments. 

Example: 

• Following a rhinoplasty procedure, your patient develops an infection from a non-sterile surgical instrument used during surgery. Your insurer will cover the costs of legal fees if your patient decides to sue your cosmetic surgery business for this error. 

Even businesses unrelated to health care are at risk if they employ a health care professional or provide some form of health care service. Incidental Medical Malpractice Insurance is designed to protect businesses who face medical malpractice exposures even though their primary function lies outside the health care industry. For instance, schools that hire a school nurse or an athletic trainer are open to medical malpractice claims. It is important to determine if incidental malpractice liability is included in your particular policy, as inclusion can vary by state and insurer.

What are the key exclusions of Medical Malpractice Insurance?

Although Medical Malpractice Insurance covers many claims of medical negligence and wrongful practices, there are some exclusions. Injuries suffered in the following scenarios would not be covered by Medical Malpractice Insurance:

• Intentional criminal acts
• Sexual misconduct
• Acts committed while under the influence of drugs or alcohol 
• Claims not named on the policy 
• Claims arising out of certain procedures/certain professions 
• Claims arising from unauthorized disclosure of patients’ medical records
• Employee disputes
• Medicare fraud

In addition to these exclusions, businesses also face high risks associated with cyber liability and regulatory requirements, such as compliance with the Health Insurance Portability and Accountability Act (HIPAA). Businesses that employ medical professionals should consider purchasing separate cyber liability insurance or seeking a policy that covers these types of exposures.

Example:

• One of your employees mixes up the prescriptions at your pharmacy. It is later discovered that he was intoxicated during the mix-up. Because this is specifically listed as an exclusion, your Medical Malpractice Insurance would not cover your pharmacy for any lawsuits that arise from this event. 

Premiums and Limits 

Because certain medical specialties carry more risk of adverse events and potential lawsuits, your specialty and location are two primary factors that determine the cost of your Medical Malpractice Insurance premiums. It is important to note that premiums for Medical Malpractice Insurance are typically not based on experience (even if a physician has a prior claim, premiums do not increase).

Additionally, every Medical Malpractice Insurance policy has different limits. For instance, your policy may have a per occurrence limit of $1 million and an annual aggregate limit of $3 million. 

Some businesses are particularly at-risk and need higher limits of malpractice liability coverage. Those professions include:

• Obstetricians
• Neurosurgeons
• Emergency room physicians
• Cardiovascular surgeons
• General surgeons
• Orthopedic surgeons
• Plastic surgeons

Claims-made vs. Occurrence

Although the majority of policies are written with a claims-made coverage, Medical Malpractice Insurance is sometimes available on an occurrence basis.

It is imperative to recognize that a claim may be filed years after the disputed treatment took place. A claims-made policy will only provide coverage if the policy is in effect when the treatment took place and when a claim is filed. On the other hand, an occurrence policy will cover any claim for an event that took place during the period of coverage—even if the claim itself is filed after the policy lapses. 

Tail Coverage

For an additional premium, you can purchase tail coverage for your claims-made policy. Tail coverage, also called an extended reporting period, provides protection for claims reported after your policy expires or ends. The event itself must have taken place during the original policy period, so tail coverage does not cover any events of medical malpractice that occur during the period of tail coverage itself. This extended coverage is active for a specified amount of time after the policy has ended. Additionally, tail coverage may have a different limit of liability. 

Because some claims of medical malpractice may not be made until years after the event took place, this additional form of coverage is essential for anyone who is changing insurers, changing their position, or even retiring. 

Example: 

• Your first Medical Malpractice Insurance policy is active from January 1, 2000 to December 31, 2015. A patient sues your medical practice on January 30, 2016 for an act that occurred in October 2015. Since the claim was made in 2016, the first policy has expired, and your new Medical Malpractice Insurance policy does not cover prior acts. You would not be insured for this claim unless you purchased additional tail coverage on your first policy. 

How do I buy Medical Malpractice Insurance?

When purchasing Medical Malpractice Insurance, it is important to recognize that this coverage can come in various forms: 

• Medical Malpractice Insurance can be purchased as an individual or group policy from a private insurer. 

• An individual or group policy can be purchased through a medical risk retention group, which is an organization that provides liability insurance for medical professionals. 

• Insurance may be provided through your employer. For instance, many physicians are provided coverage through the hospital they are employed in.

If you are in the market for Medical Malpractice Insurance for yourself or your own practice, it’s best to compare quotes from reputable insurers. Below we’ve highlighted a few of our trusted partners who offer Medical Malpractice Insurance:

Provider	Medical Malpractice/ Professional Liability	General Liability	Cyber Liability
CoverageSmith	??	??	??
CoverWallet	??	??	??
Embroker	??	??	??
Hiscox	??	??	??

How do I reduce my risk? 

Technological advancements within the health care industry may be able to lower some of the risks of medical malpractice claims. In particular, the use of electronic health record (EHR) systems may help prevent these claims. EHRs minimize the risk of patient injury due to paperwork errors, leading to less professional liability risk. EHRs also allow health care professionals to more accurately view medical histories. As a result, the likelihood of a misdiagnosis or duplicated test is significantly reduced. Easier access to patient information means information stays up to date, increasing the quality of care. 

Of course, this system introduces a number of risks if your employees are not properly trained for the technology. For instance, incorrect information entered into an EHR can be very dangerous for a patient. Additionally, this information will be stored electronically, so there is the risk of a data breach. It is essential for employees to be properly trained in how to use EHRs if your business intends to take advantage of this technology. 

Final Word 

Medical negligence can happen during a diagnosis, during treatment, or even when you are simply providing advice for treatment after an illness. In fact, many health care professionals face at least one medical malpractice lawsuit in the course of their career. These lawsuits can have devastating effects, so it is absolutely crucial to obtain Medical Malpractice Insurance to protect your business.