Medical malpractice insurance offers financial protection to physicians and others in the medical profession when medical errors occur. Similar to other forms of insurance, medical malpractice insurance policies often include liability limits that cap the amount that insurance providers pay out in claims for insured parties during any given period. Liability limits vary from state to state because medical malpractice laws vary from state to state. States often require that physicians obtain policies whose liability limits conform to certain state requirements in order to satisfy possible claims in that state.
Liability Limits Explained
Medical malpractice insurance policies include liability limits, which are agreements between the insurers and the policyholders that insurers will cover losses sustained by the policyholders up to a certain dollar amount. Policyholders who sustain losses that exceed the dollar amount set by the liability limit must cover the excess losses on their own or by other means. Liability limits are generally set as per-occurrence limits and for a total aggregate limit during the time period of the policy. Generally, malpractice insurance policies are renewable yearly.
Understanding Your State’s Liability Limits
Understanding the minimum liability limits in each state is important for every medical care professional seeking medical malpractice insurance. Obtaining the proper minimum coverage ensures that a physician’s personal assets are protected from liability in the event of a lawsuit. Additionally, knowing what caps are in place in each state helps medical professionals determine the best policies to meet their specific needs and budgets. The most common policy liability limits are $1 million per occurrence and $3 million aggregate.
Minimum Liability Limits by State
The states of Massachusetts, Rhode Island, Connecticut, New Jersey, Wisconsin, Kansas and Colorado all require physicians to insure themselves for $100,000 to $1 million per occurrence for an aggregate amount of $300,000 to $3 million. Eligibility to receive the benefits of state reforms such as damages caps and patient compensation funds is dependent on a physician maintaining medical malpractice insurance with a minimum liability limit in the states of New York, Pennsylvania, Indiana, Louisiana, Nebraska, New Mexico and Wyoming. For example, Indiana’s Patient Compensation Fund covers damage awards over $250,000, allowing physicians to maintain lower per-occurrence liability limits.
Minimum Liability Limits in Non-Mandated States
Many states do not mandate that physicians carry a minimum level of medical malpractice insurance. In these states, hospitals often require that medical professionals maintain a certain minimum level of liability insurance to obtain hospital staff privileges. Furthermore, many client contracts that hospitals and medical practices enter into require that minimum liability limits be maintained. Thus, in practice, the minimum level of liability that a medical professional must maintain is often in line with the state cap on medical malpractice claims. For example, California, Florida and Texas limit damage awards in medical malpractice cases.
Rates Vary by State
Since typical medical malpractice insurance liability limits vary from state to state, the rates for this type of insurance vary significantly by state as well. The “medical malpractice climate” of the state, or the likelihood that a doctor will be sued, along with state limits to liability help to determine the rates. Thus, in states in which it would be wise for a physician to obtain insurance with higher liability limits, insurance rates tend to be higher, because the insurance companies are likely to have to pay out more money in claims.
Medical malpractice insurance liability limits vary from state to state; however, typical policies stipulate between $100,000 and $1 million per occurrence and $300,000 to $3 million aggregate coverage. Any damage award in excess of these limits must be covered by the policyholder. Liability limits per state tend to be in line with the state’s medical malpractice laws regarding damage awards. Some states mandate that medical professionals keep a minimum amount of liability insurance in order to qualify for such things as damage award caps and patient compensation funds. In states that do not have mandatory minimums for liability coverage, hospitals often mandate physicians retain minimum liability limits in their insurance policies.