What is Medical Malpractice Insurance and How Does it Work?

Medical malpractice is considered a negligence which leads to injury or death to a patient. A lawsuit involving medical malpractice is very expensive and time consuming, thus inviting the need for medical professionals to reduce their liability by purchasing medical malpractice insurance.

Medical malpractice insurance protects a professional working in the medical industry from loss due to a lawsuit. Contrary to popular belief, medical malpractice liability insurance does not work the same as auto insurance. When you purchase auto insurance, the provider usually looks at your driving experience before extending a policy to you. If you have a claim, usually your insurance premiums increase. Experiments with an individual physician's experience rating have not worked because physicians' claims experience fluctuates over short time periods, which makes it difficult to produce a stable estimate of their risk.

If a person were to sue a doctor for medical malpractice claim, the plaintiff would be the patient, a party acting on behalf of the patient, or the executor of a deceased patient's estate. Malpractice lawsuits can be made against a single physician, however, they can also be made against a hospital, clinic, or other type of medical institution.

Compensatory and punitive damages may be awarded to a plaintiff if they win the case. These damages consist of loss wages, medical expenses, and life care expenses. If reckless conduct was involved, punitive damages may also be awarded to the plaintiff.

How Medical Malpractice Insurance Rates Are Calculated

Medical malpractice insurance rates are set and approved by the state insurance commissioner in each state. From there, other factors come into play such as a physician's specialty and geographic location.

Insurance rates have increased which has caused concern among the medical community. Some analysts have speculated that there are a number of reasons why rates have risen including:

* The repeating cycle that the insurance industry experiences.
* There are fewer insurers on the market and less competition on premiums.
* Lack of income from the investment of insurance providers' reserves.
* Growth in the size of payouts to patients.

Do Doctors Really Need Malpractice Insurance?

Nearly all states require medical malpractice insurance. Anyone working in a medical profession can purchase insurance from an independent provider, a physician-owned mutual company, or through an insurance broker.

If doctors do not carry insurance, they open themselves up to a potential lawsuit in case something unexpected happens. Financial ruin can ensue if a patient brings a lawsuit against a doctor. And it only takes one lawsuit make or break the career a doctor had worked so hard for!