Malpractice Insurance

Malpractice Insurance Definition

The malpractice insurance is an insurance that is taken and purchased by the medical professionals and experts to safeguard themselves against professional Liability. This is a type of insurance product that offers protection to doctors, medical professionals and experts from those patients who initiate legal case or suit against them on account for medical negligence on their part.

Purpose

This kind of insurance product helps in the risk transfer function. They help in the risk transfer of liabilities from the medical experts or practitioners to the third party. The third-party can be categorized as banks and insurance companies. The third-party executes the risk transfer function by means of a contract between them and the medical experts, which details the terms and conditions of the insurance, claim limit, and the cost of the policy.

Malpractice Insurance

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Types of Malpractice Insurance

It is generally of two types. They can be categorized as occurrence-based policies and claims-based policies.

#1 – Occurrence Based Policies

The occurrence-based policies help in claims settlement as and when they occur during the tenure of the policy. It is not dependent when the claims are made. The occurrence-based policies are termed as long-tail policies. The long-tail policies remain in force even if the insurance company has closed its business or the medical expert has changed his jobs or place of practice.

#2 – Claims Based Policies

The claims-based policies help in claim settlement as and when they occur and are filed for the claiming process when the policy is in full force. Claims-based policies are termed as short-tail based policies. The short-tail policies do not always remain a full force, and once the period of policies has lapsed, it has to be renewed. Any damage or liability incurred by the practitioner during the lapse period results in substantial loss to the expert itself.

Examples

Example #1

Suppose an individual complains of chest pain. He approaches the medical expert who, after diagnosis, recommends certain types of procedures on the heart. The individual undertakes the operation for heart ailment as per the initial diagnosis given by the doctor. However, later it is revealed that the individual suffered from a mild ulcer in a food pipe close to the chest and would have been easily cured with oral medications. In such a scenario, the patient can file a case on the medical expert and can claim for the damages. As medical expert does not have access to a large amount, the malpractice insurance can help the expert repay for the damages incurred on account of diagnostic error.

Example #2

Suppose an individual had to go for a small procedure in one of the fingers. However, the medical expert performs a good procedure but mildly damages the adjacent fingers. The patient can approach the court and can raise legal liability on the doctor if he is able to prove medical negligence. If found guilty, the doctor can repay the amount by using the protection as offered under malpractice insurance.

Cost of Malpractice Insurance

  • The cost depends on the type of specialty the doctor or medical practitioner deals in. The cost of the insurance depends on the type of policy that is whether they are claims-based policies or occurrence-based policies. The claim limit, as prescribed in the policy, determines the cost of the policy.
  • The cost of the policy also depends upon the past loss history in line with the medical experts as well as location and their legal laws.

What does Malpractice Insurance Cover?

It covers only the events that result from medical negligence. However, the policy provides certain exclusions as well. The policy won’t settle any claim if the medical practitioner provides services in the influence of alcohol or they have involvement in any kind of sexual misconduct or if they share patients’ records without their approvals or they were repeat offenders and had involvement in illegal pursuits.

Need

  • As per several surveys undertaken in the US, it was determined that the majority of doctors would require malpractice insurance.
  • There has been a rise in the levels of diagnostic errors on the part of medical professionals, which also has resulted in the deaths of the patient itself.
  • There has been a rise in the number of suits that involve medical negligence and diagnostic errors as of the present day.
  • To curb the current impending demand and to compensate the patients on account of medical misconduct, malpractice insurance is required and much needed.
  • The doctors don’t have access to big lump sums to cover such costs, and hence they undertake such policies to cover such costs and liability.
  • It protects the practice of doctors at the same time it helps in covering the costs arising out of the claims of the affected patients.

Malpractice Insurance vs Professional Liability

  • The professional liability is an insurance product that helps settle claims for the experts and professionals arising out of the professional hazard.
  • The takers of the professional liability comprise of lawyers, professional experts, and accountants.
  • The malpractice insurance is a variant of professional liability insurance itself wherein it helps the medical practitioners settle claims raised by their clients or patients.
  • The professional liability insurance settle claims for professionals other than the doctor.

Advantages

  • This is utilized as a risk transfer function.
  • They help in the protection of the reputation of medical experts.
  • It offers protection even when the patients file fake lawsuits.

Disadvantages

Conclusion

Malpractice insurance is a type of professional liability insurance product. It helps the medical experts in claim settlement when the patients file for legal suits against them claiming medical negligence. Each policy can help the medical experts on the claim settlement to the claim limit as prescribed within the policy.

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