Medical malpractice insurance is essential for protecting physicians from financial and legal risks, particularly amid the rise in malpractice lawsuits, according to a March 5 article on Physicians Thrive’s website.
In 2023, malpractice verdicts hit a record high. There were 57 medical malpractice verdicts of $10 million or more, with more than half of those verdicts hitting $25 million.
Here are nine things to know from the Physician’s Thrive article.
1. Approximately 1 in 3 doctors will face a malpractice claim at some point in their career, and malpractice lawsuits cost the U.S. healthcare system billions of dollars annually, according to an American Medical Association study.
2. There are two main types of malpractice insurance: claims-made and occurrence-based policies, according to the article. A claims-made policy provides coverage only while the policy is active. If a claim is filed after the policy has ended, the physician will not be covered unless they have purchased tail coverage, which extends protection beyond the policy period. Claims-made policies generally have lower initial premiums, ranging from $5,000 to $20,000 per year, making them the preferred choice for about 80% of physicians.
2. An occurrence-based policy covers incidents that happened during the policy period, regardless of when a claim is filed. While this type of coverage is more expensive — typically 20% to 30% higher than claims-made policies — it eliminates the need for tail coverage.
3. Tail and nose coverage are additional considerations for physicians switching insurance policies. Tail coverage extends protection after a claims-made policy ends and typically costs 200% to 250% of the physician’s final premium.
4. Nose coverage extends a new policy backward in time to cover past incidents and usually increases the annual premium by 10% to 30%.
5. On average, physicians pay around $7,500 per year for coverage, but those in high-risk specialties, such as surgeons and OB-GYNs, can pay anywhere from $40,000 to $225,000 annually, the article said.
6. Lower-risk specialties, such as primary care and psychiatry, typically pay between $4,000 and $12,000 per year.
7. Location plays a significant role in determining premiums, as states with high litigation rates, such as New York, Florida and Pennsylvania, tend to have higher costs than states with tort reform measures in place.
8. When choosing a malpractice insurance policy, physicians should assess their coverage needs based on employer requirements, specialty risks and potential future claims, according to the article.
9. Comparing providers and selecting a financially stable insurer is essential, as is understanding policy terms, including coverage limits and exclusions, according to the article. Physicians should also ensure they have access to tail or nose coverage if needed.