America is now the lawsuit capital of the world, and most professionals know to get the best liability insurance. It has nothing to do with how good you’re with your skills, mistakes do happen and you can be sued for those mistakes.

For those in the legal and healthcare professions, this type of insurance is popularly known as malpractice insurance.

Most health professionals like doctors, nurses, chiropractors, physical therapist have malpractice insurance to cover the claims arising from medical mistakes, including misdiagnosis or any other situations involving injury to the patient.

Even attorneys are now getting on the malpractice insurance bandwagon to cover any claims resulting from poor legal advice or poor case management.

Before we get to how much is malpractice insurance and how to select the best insurance carrier, we first need to examine what constitutes malpractice.

What is Malpractice Insurance?

Rarely do you see a professional in the health care or legal field without robust malpractice insurance.

Since we humans are prone to make mistakes, this is the insurance that protects the insured financially when sued by clients or patients, for committing errors that results in bodily injury or financial loss.

Doctors and lawyers are the biggest purchasers of malpractice insurance. Nursing practitioners and chiropractors, including physical therapist are also known to carry large amounts of coverage insurance as they go about delivering patient care.

Malpractice insurance is often referred to as personal liability insurance. The insurance premiums are not cheap, and can run into thousands of dollars yearly for certain professions.

In most states, malpractice insurance is required by law for many professionals.

Now you know why most doctors would order multiple tests just to cover their behind, just in case of lawsuit.

How Does Malpractice Insurance Work?

Let’s say you went to a doctor and they operated on the wrong bad foot, you can sue the surgeon for negligence.

The doctor would surrender the malpractice insurance carrier’s information, and the civil lawsuit papers would be forwarded to their lawyers.

Over 85% of malpractice lawsuits never make it to trial. The insurance company simply settles before legal bills pile-up.

Some of the malpractice lawsuits will go to trial if the two sides cannot come to a financial settlement.

The insurance industry maintains a database of all malpractice lawsuits filed against all types of professionals.

The database is used in two ways. To help determine high-risk professions and how many times a certain individual has been sued in the past for negligence.

Your yearly malpractice premiums would be determined by those two factors. Take for instance Obstetricians, they get sued a lot and they tend to pay one of the highest malpractice insurance premiums.

Factors That Helps to Determine Malpractice Insurance Costs

Location! Location!

When it comes to malpractice insurance cost, two significant factors come into play to help determine the yearly premiums. The state where the professional is located, and what type of profession.

Take for instance the medical liability insurance cost in the USA, yearly premiums vary widely even within the same specialty.

Since the health care field is one of the biggest purchasers of malpractice insurance, the rates will be based on where the physician is licensed to practice.

Some states have taking the foresight to reform tort liability laws and it’s reflected in a lower premium cost.

States like Texas and California are prime examples of reasonable tort reforms that have contributed to reduced doctor’s yearly malpractice insurance premiums.

On the other hand, states like New-York and Illinois have the highest medical liability premiums due to liability laws that punish practitioners.

Medical Specialty

Some medical specialties are more prone to lawsuits, which helps to drive up yearly premiums. Since the insurance industry keeps accurate data of all malpractice cases filed in the US and in what state and profession, premiums can be easily determined.

For example, primary care physicians have the lowest malpractice rates as compared to surgeons.

For doctors that help deliver babies, the high cost of malpractice insurance is one of the reasons there are currently shortages of doctors in that specially.

OB/GYN practitioners face other determining factors, like the statute of limitations on claims.

States with shorter statutes of limitations, usually experience the lowest liability rates for doctors. In some states, childbirth statute of limitations can last as long as 18 years.

Now you know why the average cost of childbirth delivery is about $19,000 for vaginal birth and over $27,000 for C-Section birth. You can see from this CNN article the real cost of childbirth delivery.

How to Select the Best Malpractice Insurance

To help you find the best malpractice insurance coverage that’s also affordable, adhere to the following steps.

1 – Identify industry specific carriers. In some professions, the majority of the malpractice insurance policies are underwriting by certain insurance companies.

Your initial search for an affordable coverage and premium should be initiated with those insurers.

Best way to find industry specific insurers is through your professional association. Each professional association has preferred insurance carriers with lower malpractice insurance cost.

Also, the insurance company that specializes in selling malpractice insurance in your industry would have tips about how to avoid lawsuits, which helps to keep rates low for all members.

2 – You can get some quotes. Most associations would have more than one preferred malpractice insurance carrier.

You can start your search for the lowest premium by getting some quotes to compare, before making your selection.

You can also get quotes from other insurers to compare to the quotes from the association endorsed malpractice carriers.

Just make sure you’re comparing policies with the same metrics, before selecting the best malpractice insurance with the lowest premium.

3 – You want a highly rated insurance company. Rarely do insurance companies go out of business because it’s a very lucrative business. Insurance companies are in business to gauge risk and rarely do they misjudge how much will be paid out from claims every year.

Despite all that, you want a company that’s highly rated with the financial acumen to fight and pay any future claims.

The two best online websites to conduct your research on the most viable malpractice insurance companies are: AM Best and Fitch Ratings.

4 – Search for Complaints. In this internet age, you can find out about any company by just searching for complaints against the insurer.

Be sure to take time and read any complaints from the insured and the claimant.

If the malpractice insurer has too many complaints you might be dealing with a company that likes to collect premiums and hate paying any claims faithfully or on time.

Just a Word of Caution

Make sure the malpractice insurer you select is admitted to sell insurance in your state of residence. Admitted carriers are licensed by the state and have some statutory obligations they must adhere to.

Your search for the lowest provider of malpractice insurance should not make you seek an out of state insurer.

If the insurer you have in mind is not admitted in your state, find out why before making your final choice.

It’s better to buy your malpractice insurance from admitted carriers than one from out of state, regardless of the yearly premium cost.