Buying medical malpractice insurance independently as a physician

The cost and logistics of medical malpractice insurance can be intimidating for physicians who purchase it on their own. When a physician is making decisions about how to select a medical malpractice insurance company and policy-rather than receiving medical malpractice coverage as part of an employment benefit-there are a number of considerations to keep in mind. 

Self-employed physicians and doctors who practice in multiple states often have to buy their own medical malpractice insurance. Medical malpractice insurance can be the most important decision and one of the biggest costs involved in running an independent clinical practice.

Experts who advise physicians about medical careers and about coping with medical malpractice lawsuits advise doctors to think about issues that go beyond the straightforward cost of a medical malpractice insurance policy. 

Buying medical malpractice insurance independently requires substantial investigation into the specifics. It is important that doctors are careful to cover all bases when making this decision. While it can be challenging, spending time looking at the details can pay off in the long run.

Locums, part-time work and telemedicine

Often, physicians who work in part time or alternative clinical settings need to purchase medical malpractice insurance coverage on their own. When a physician is insured through an employer or independently, it is not safe to assume that a medical malpractice policy will automatically cover “outside” patient care, such as telemedicine, moonlighting, or locum tenens work.

Habits such as careful documentation can be useful risk-reduction strategies, despite being time-consuming, says Andrew Wilner, MD, an associate professor of Neurology t the University of Tennessee Health Science Center in Memphis, Tenn. Yet he says that approximately 50% of physicians will be sued during their careers, and he advises doctors who take on temporary clinical assignments to insist on adequate professional liability insurance appropriate for the assignment.

He explains that medical malpractice coverage from one job doesn’t always apply to other assignments.

“Even if a physician already holds malpractice insurance for his or her regular job, an additional policy will likely be necessary for locum tenens work,” says Wilner, who is also the author of The Locum Life: A Physician’s Guide to Locum Tenens.

Doctors who arrange for locums assignments directly with a hospital often need to purchase medical malpractice insurance in their own. Wilner says that major staffing companies like CompHealth and Staffcare routinely provide professional liability insurance that covers the period of work, often including a tail with their malpractice insurance policies. But he says that it is important to confirm coverage when working with a staffing company and to determine what kind of additional professional liability coverage will be needed when a doctor finds a locums assignment independently. 

Shopping around

Of course, cost is a significant issue. Typically, medical malpractice insurance companies cover certain geographic regions, and it is worthwhile to compare the prices of different policies offered by more than one company within your region. Physicians can contact insurance companies directly to ask for quotes, or can work with a broker. 

If shopping around independently, it is important to ask questions. Does the company have a tendency to settle cases or to fight them in court? Do they have experience in specific specialties? Do they raise premiums after a doctor has settled or lost a case? All of these factors can help a physician understand the differences between companies that go beyond cost.

The first step for a physician seeking to independently purchase malpractice insurance is to find a knowledgeable insurance broker who has extensive experience with the ins and outs of medical malpractice coverage, says Stacia Dearmin, MD, a pediatric emergency medicine physician in Akron, Ohio, who also runs Thrive: Insight, Education, Support, a company that advises doctors about reducing the stress of malpractice litigation.

“A strong broker can help you identify the indemnity carriers that have the most experience in your state and specialty,” Dearmin says. 

What to look for 

Typically, when an employer provides medical malpractice insurance, there is little, if any, choice regarding the company and the policy details. This can be a relief for doctors who don’t want to negotiate cost and coverage limits. For doctors who are making a medical malpractice coverage purchase independently, it helps to think about what you are actually paying for when you get a policy.

The best medical malpractice insurance company may not necessarily be the company that offers the lowest premium, but the one that offers best value for money, Dearmin says.

“In my view, when you purchase malpractice insurance, what you're really buying isn't just coverage for a payout,” Dearmin says. “You're buying access to knowledgeable claims managers and the skills and expertise of a truly excellent attorney specialized in malpractice defense to guide and defend you, whenever and wherever you may need them.”

Previous lawsuits

When getting quotes for the cost of medical malpractice insurance, listing information about any previous medical malpractice lawsuits is a requirement, regardless of the outcome.

This can be a concern, and, depending on the outcome and the number of lawsuits, it can make it difficult for a physician to obtain coverage. However, one or two lawsuits are not necessarily a deal breaker, and honesty is vitally important when applying for medical malpractice insurance. 

Lynette Charity, MD, is an anesthesiologist who travels the country speaking to doctors about how to cope with medical malpractice lawsuits. She was inspired to do this type of work after dealing with her own grief when she was a defendant in a medical malpractice lawsuit that she eventually was cleared of.

Charity reassures doctors that she has not had a problem getting work or medical malpractice coverage after her lawsuit. Lying about previous lawsuits, however, can have serious consequences and may invalidate a policy once the company find out about any dishonesty.

Regional variations 

Doctors who move their practice from one state to another may face new and complex issues when independently buying medical malpractice insurance. 

Physicians who take on assignments in more than one state may be able to simplify medical malpractice insurance when working with a staffing agency.

For example, Wilner says that CompHealth, a company he frequently works with, provides coverage in every state under one master policy number so no new policy has to be assigned. Doctors who independently purchase coverage in several states similarly need to work with a medical malpractice insurer that covers more than one state. 

Regulations regarding medical malpractice differ according to state specific rules. Wilner notes that there can be regional variations in medical malpractice policy requirements, and that doctors who travel for clinical assignments need to be aware of these differences. For example, typical policy limits across the country are $1 million per claim and $3 million aggregate per provider. States such as New York and Virginia require higher caps, says Wilner.

In most states, any payout in response to a malpractice claim leads to a review by the state licensing board, according to Dearmin, According to the Federation of State Medical Boards, “Some boards have built-in levels of malpractice

that trigger investigations, such as a certain number of malpractice settlements in a certain span of time¹.”

“If you must deal with the state medical licensing board it is extremely helpful to have your indemnity carrier and defense lawyer walk through that process with you,” she says.

Dearmin advises doctors to ensure that the coverage purchase includes support and defense costs for licensing issues that could come up. 

And Charity, who works per diem in Arizona, has medical malpractice insurance provided by her employer. Yet, she explains that she pays $8,500 per year to maintain her premium in Washington even though she no longer practices there.

She explains that this is due to a complicated regulation stimulating that if she were to be sued for any clinical work in any state, it would be placed in the National Data Bank and her Washington malpractice company could be named. Charity acknowledges that it is confusing, even for her. “This is the state of healthcare,” she says.