Among the financial concerns of medical professionals, the cost of malpractice insurance is shared by most.
Physicians, nurses, nurse practitioners, and allied health professionals should research how much malpractice insurance costs. It's the only way to be financially protected against claims.
But here’s the thing: The cost of malpractice insurance varies considerably depending on factors such as your profession, specialty, location, history, risk, insurer, hours worked, and type of services. Basically, there's no one-size-fits-all answer.
Understanding the average malpractice insurance cost for your profession is crucial for anyone practicing medicine, and this article covers the factors in-depth and offers some average price estimates.
9 Factors that Affect the Cost of Malpractice Insurance
The price of malpractice insurance isn’t set in stone. It’s important to keep in mind that the cost of a malpractice case, as well as the number of malpractice cases in the U.S., influence premiums. We talked to the Berxi product specialist team to learn some key factors that can affect how much medical malpractice policies cost.
Professions have different risk levels, which contributes to the cost you’d have to pay for your professional liability insurance policy. Basically, the more risk involved in what you do, the higher chance for something to go wrong, and the more likely you’ll be named in a claim.
For example, NPs who have more authority to diagnose and prescribe can have a higher malpractice policy cost than RNs who receive more oversight. This is why your profession (and sometimes your specialty within it) will matter when you’re applying for a malpractice policy.
Your medical malpractice insurance cost depends, in part, on where you practice. Some states, like Florida, known for a higher risk due to its more litigious environment, may have higher premiums, while others rate similarly for cost. In fact, a medical malpractice policy for a healthcare provider in Florida can cost almost twice what they'd pay in another state.
According to Becker's ASC Review, representing data from January to June 2022, California, Texas, and Florida are the top three states for lawsuits in the U.S. The higher frequency and severity of medical malpractice lawsuits contributes to the increased premiums in those regions.
3. Insurance Provider
When looking for coverage, you’ll notice variations in cost depending on the insurance company you choose.
Some insurers may specialize in specific medical fields, offering more competitive rates for those professions. Other insurance carriers might cover exposures that don't apply to you, making your policy cost more than necessary. And some companies might pay commissions to brokers or because they use intermediaries.
This is why comparing different insurance companies is vital to finding cost-effective protection for your specific circumstances and needs. You will want to know the list of what your policy covers and who writes the actual policy.
For example, at Berxi, which is an underwriting unit of Berkshire Hathaway Specialty Insurance Company, your policy is a Berxi policy. You won’t pay a broker fee or an association fee. Here’s how Berxi compares to its competitors.
4. Insurance Limits
More commonly known as "limits of liability,” your insurance limit is the amount your insurance provider will pay per claim and per year. A higher limit will likely cost you more annually but will provide you with more funds.
For instance, liability limits of $500,000 per claim and $1.5 million aggregate are cheaper than a policy with limits of $1 million per claim and $3 million aggregate
5. Types of Malpractice Insurance
Just as there are different coverage amounts to choose from, there are also different types of malpractice insurance policies. These are broken into claims-made policies and occurrence policies.
To be clear: both types will provide you with a legal defense for covered malpractice claims. And both types of policies will pay for covered damages that you might have to pay someone who’s sued you for their injuries.
Here are the types of malpractice insurance policies you will hear about:
An occurrence policy covers claims that arise from services you performed during the policy period, even if the claim is brought well after the policy expires.
Ex. You perform a procedure for a patient today, but that same patient sues you five years from now. If you had an occurrence policy in effect when the incident “occurred” (in this case, when you actually performed the procedure), you can call on that policy to assist with the claim.
A claims-made policy is primarily focused on when the claim is made. If you have a claims-made policy and a claim is made during the policy period, then the insurance applies.
This policy is typically less expensive than an occurrence policy, but it increases over the first five years before leveling out. Then, you may want to buy tail coverage to extend the claims reporting on your claims-made policy.
Tail coverage is an additional feature you might buy after canceling an existing policy or before a claims-made policy expires. With tail coverage, you’re still covered for claims filed against you for incidents during the policy period after the policy ends.
Tail coverage can be purchased as a supplement to an existing policy.
6. Working Hours
Insurers consider full-time healthcare professionals to carry a higher risk due to their increased exposure to risk than part-time workers. The likelihood of a potential claim increases as the provider works longer hours and sees more patients.
Just like a home or auto insurance company, your medical malpractice insurance company may consider your claims history when calculating your annual premium. The more substantial your claims history, the higher the perceived risk, leading to increased premiums. However, the outcome and resolution of those claims are often considered. In extreme cases, medical malpractice insurance companies might even decline offering coverage altogether.
8. Types of Services
Some services inherently carry a higher risk profile, which translates into higher premiums. For example, high-risk areas such as cosmetic procedures can elevate your insurance costs.
9. Buying Direct or from a Broker, Agent, or Program Administrator
How you purchase your policy matters when it comes to cost too. Buying directly from an insurance provider, such as Berxi, can often result in lower premiums because it eliminates the person or organization in between.
If you buy through a broker, agent, or program administrator, you may end up paying an average of 15-20% more each year (which adds up!).
Average Malpractice Insurance Costs
While malpractice insurance costs have remained relatively stable (according to a 2017 report), the average rates can vary. This variance depends on numerous factors, including your specialty, location, claim history, and coverage amount, among others.
When thinking about the cost of medical malpractice insurance, averages can be a useful guide, but your own circumstances will ultimately determine your exact price.
Here are examples of the annual average malpractice insurance cost by profession. These are based on an occurrence policy, a full-time professional in Texas, with the typical limits of liability ($1 million/$3 million). This combination is just an example, so costs can vary per circumstances.
The first set of figures is for healthcare professionals who are covered under their employer’s policy. These professionals buy their own individual coverage to better protect themselves and their interests that might not be covered by their employer’s insurance. The second set of figures are for a primary policy, which you would buy if it was your only source of coverage. Independent contractors typically buy these policies.
|Profession||Price if you have coverage under employer’s policy||Price if you don’t have any coverage|
|Social worker, clinical||$105||$253|
Who Pays for Medical Malpractice?
Who foots the bill for a malpractice policy can vary depending on the situation. If you’re self-employed or working as an independent contractor, you’ll likely bear the expense alone. However, even if your employer offers coverage, it's often wise to carry your own supplemental policy. This ensures you have a safeguard that’s tailored to your specific needs. It’s also crucial to understand that while your employer's coverage can provide some protection, it often serves the institution's interests more than your own.
How Much Is Malpractice Insurance for You?
So, how much will malpractice insurance cost you? The honest answer is, “it depends.” As you’ve just read, at least 9 factors affect malpractice policy costs. But here’s the good news: not only do you have control over many of these aspects, you now have the information you need to choose which insurance options are best for you.
But there’s more to picking a policy than just cost. Spending fewer dollars in the short term doesn’t always translate into longer-term satisfaction. When researching malpractice insurance, also consider a company’s reputation, financial health, use of agents or brokers, range of insurance products, and customer service record.
As a direct-to-customer insurer, Berxi offers competitive, affordable premiums for medical malpractice insurance policies. But it does more: it delivers consistently high levels of knowledge, support, and responsiveness, beginning the moment a customer decides that a Berxi policy is the right choice for them.
Of course, the best way to find out how much a policy would cost is by getting a quick quote — get a quote today.
Read a real medical malpractice story from one Berxi customer who shares her wrongful death claim experience.
Robyn Correll, MPH contributed to this article