What is Medical Malpractice Insurance?

Medical malpractice insurance is a form of liability insurance carried by doctors, sometimes doctor-owned groups, and hospitals or clinics. This form of insurance, when used privately, helps to guard against losing individual assets if an injured patient successfully argues that a doctor or hospital has committed malpractice. Malpractice doesn’t have to be intentional and can sometimes be accidental, but when it results in ongoing emotional or physical costs for a patient or death, and if that patient or their loved ones are able to prove malpractice, insurance usually covers these costs. Were it not for medical malpractice insurance, any medical facility or individual that had committed malpractice would have to use personal or company funds to cover the damages owed to the individual or survivors.

In most cases, doctors and big medical facilities are required by country law to carry malpractice insurance of some form or another. Some countries don’t have this law, or in large countries, states, provinces or regions could have laws differing from each other on how much, if, and when liability insurance is required. There may be exceptions as to who must carry insurance. For example, doctors in the US military or employed by any branch of the government may not require insurance because the employer (the government) is deemed liable for malpractice. Doctors who would technically carry their own medical malpractice insurance may also have employers, like large hospitals, that meet this cost, which can be an attractive job benefit.

Medical malpractice insurance has different cost levels depending on the region and specialty. The most expensive plans can easily exceed $100,000 US Dollars (USD) per year. Some of the highest risk specialties are also the most common specialties, and doctors like obstetricians are typically asked to pay about $100,000 USD per year for private insurance coverage in the US. From a risk standpoint only, there is some sense in charging the obstetrician this much because his or her medical practice has the possibility of injuring a baby, which could mean a lifetime of compensation for reduced function and care of ongoing medical conditions.

There are many criticisms of medical malpractice insurance, and in countries where it is used most, governments and physicians have been strong advocates for a wide variety of reforms. For example, most types of this liability coverage don’t take into account doctor experience, and some physicians have argued that like auto insurance, seasoned doctors ought to be able to pay less money. Another criticism of this form of insurance is that it tends to drive up medical prices for all consumers because doctors charge more to pay for their insurance.

Additionally, some see the medical malpractice insurance industry as partly at fault. Reports of US liability insurance as of the mid 2000s suggest that only about 20% of what doctors pay in insurance is received by injured patients. The rest is consumed by administrative costs of insurance companies or directly profits insurers.