Medical Liability Insurance: How Much is Necessary?

Physicians and other medical professionals should carry medical liability insurance. How much is necessary? This question can be answered by considering that this type of insurance is purchased to cover monetary settlements that must be paid as awards from lawsuits. As medical malpractice goes, any and every act or any failure to act by a medical professional which diminishes deviates from the “acceptable standard” of services in the medical community is deemed as medical malpractice. Because such actions can cause harm to a patient, it is also called professional negligence on part of the physician or medical professional involved. For this reason, liability insurance is required to practice medicine in many states.

Group Coverage vs. Individual Coverage

Working for a hospital or other medical facility often provides some liability coverage. Doctors who work in medical groups or those who are direct employees of hospitals or other managed-care facilities are usually covered by a group liability policy, sometimes as an employee benefit. This coverage is not always enough, however. The medical liability insurance provided by a hospital or facility also does not provide portability in the event you decide to change employers or start a private practice. If having your own legal counsel is important to you in the event of a lawsuit directed at you, consider your own medical liability insurance policy to ensure adequate coverage.

Understanding Coverage Limits

There are many different coverage limits which will only pay out a certain amount for each claim plus an annual limit as well. As an example, a $1,000,000/$5,000,000 policy limit means that a maximum payment on any one claim is $1,000,000 and the total number of $1,000,000 claims allowed to be paid out in a given year is 5, giving an annual aggregate total amount of $5,000,000. The higher the limit for any one claim, the better, as medical settlements are often in excess of a $1 million. You must read the fine print, as not all medical liability insurance policies are equal. While some policies do include legal costs, others do not.

The bottom line is that the amount of coverage you need will ultimately depend on factors such as your income and assets as well as how affordable the cost of coverage is. It is wise to be covered by individual medical liability insurance because it is possible to be personally liable in a medical malpractice lawsuit. Even in a state where medical liability insurance is not a state requirement to practice medicine, your best bet is to obtain coverage if at all possible.

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