Malpractice Insurance

Malpractice insurance is a type of of professional liability insurance purchased by health care professionals (and sometimes by other types of professionals, such as lawyers). This insurance coverage protects health care providers against patients who sue them under the claim that they were harmed by the physician's negligent or intentionally harmful treatment decisions.

A study by the Massachusetts General Hospital Department of Medicine concluded that most medical doctors will need malpractice insurance sometime during their professional career – and for good reason. Medical negligence is the third leading cause of death in the United States, and it can happen during diagnosis, during treatment or as part of advice given for treatment after an illness. Between 80,000 and 100,000 deaths in the US every year are caused by diagnosis errors, and 195,000 patients die in hospitals each year due to preventable mistakes. 

In the US alone, 15,000 to 19,000 medical malpractice suits are filed every year, and $38 billion was paid out between 1986 and 2010 for misdiagnosis of a patient. However, 80 percent of medical malpractice cases end with no payouts at all. 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.

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, he or she can end up paying extremely high premiums. The premiums can become high because of such factors as amount of coverage needed, claims severity, claims frequency, location of practice and laws in the area. Only about 5 percent of physicians are responsible for about 54 percent of medical malpractice penalties. Medical malpractice premiums tend to rise, on average, about 0.5 percent annually.

Lawyers are also required to carry malpractice insurance to cover any real or perceived failure to render professional services.