(Plus, how the how medical malpractice policies are actually priced)
The decision you make now about choosing the right medical malpractice policy could come back to haunt you in several years. Medical malpractice claims take years to surface, with lawsuits being filed in 2024 for incidents that occurred as far back as 2019.
That makes finding the right policy to protect your practice in the future more than just an item on your practice owner to-do list. For example, selecting a policy from an insurance company that’s no longer solvent in a few years or one that doesn’t fully cover your risk can turn into a financial liability. Doing a little research upfront to make the right choice for your professional liability insurance ensures your business can weather the storm of a future claim.
While cost is an important factor in choosing the right medical malpractice policy, it’s far from the only consideration. Focusing solely on price may leave you with inadequate coverage, unexpected expenses or exposure to risks that aren’t addressed in your policy.
Here’s a breakdown of how medical malpractice insurance is priced and the key factors to consider before deciding what policy is right for your practice.
How medical malpractice insurance is priced
Every insurance company works differently to determine premium prices, but there are some general principles that typically apply.
- Headcount and business ownership
The larger the team, the higher the premium. The number of individuals covered under your policy is one of the major factors in determining the overall cost. - Clinical specialty
The type of services you offer significantly affects your insurance premium. For example, a policy covering dermatology will likely differ in price from one covering solely Botox injections or IV hydration services. Each specialty has its own set of risks, so this is reflected in pricing. High-risk specialties like urgent care tend to incur higher premiums. - Geographic location
Where you operate can heavily influence your medical malpractice policy rate. Lawsuit frequency and settlement sizes vary by location, which makes this a key consideration in pricing. Providers in large metropolitan areas like New York City may face higher premiums than more rural areas due to the increased likelihood of lawsuits. - Litigation history
If your business or the individuals you employ have a history of lawsuits or claims, your insurance premiums will reflect that risk. A clean litigation history will result in lower premiums, while a history of legal issues will drive costs up. - Revenue-based pricing models
Some insurance companies use a revenue model to determine pricing. If this is the case, the more revenue your practice generates, the more you may pay for coverage. This can be a useful factor to keep in mind as your business scales.
Why you shouldn’t focus solely on price when comparing medical malpractice insurance
While price matters, there are other critical factors to consider when selecting malpractice insurance:
- Insurer’s financial solvency
Just like you would assess a bank before taking a loan, it’s important to review the financial stability of your insurance company. Medical malpractice claims can take years to emerge, with lawsuits sometimes filed five or even eight years after an incident. Ensure your insurer has the longevity to be around when you need them the most.
Action Item: Research your insurer’s financial ratings and solvency before committing to a specific insurance carrier.
- Deductible options
Some policies have deductibles, meaning you pay out-of-pocket before coverage kicks in. Other policies, like CM&F Group’s policies, offer “first dollar defense” coverage. This means the insurance provider covers the costs from the outset, without requiring any upfront payment from you.
Action Item: Check whether your policy has a deductible and understand how that impacts your finances in the event of a claim.
- Location-specific endorsements
Policies can have location-specific endorsements, meaning they only cover you at the listed location. If you’re planning to expand or relocate, make sure your policy is portable or can easily adapt to cover multiple locations.
Action Item: Verify whether your policy is location-specific and make any necessary adjustments if your business is expanding or relocating.
- Covered services
Not all services may be covered under every policy. For instance, some policies might differentiate between services offered at a brick-and-mortar facility versus mobile services. If your practice is expanding into new areas of care, you’ll need to ensure that these are included in your coverage.
Action Item: Make sure all the services you provide, including future expansions, are covered under your policy. Know when to inform your insurance carrier about a new service line.
Best-in-class coverage for allied health professionals
A lot of medical malpractice insurance policies are designed with physician-led practices in mind. At CM&F Group, we’ve built a program specifically tailored to allied health professionals. “We have a program we’ve built out over the years that we find to be a best-in-class coverage offering that fits really well for the risks allied health professionals face,” says Will Sullivan, executive vice president of CM&F Group.
Our policy ensures portability, no deductibles and provides first dollar defense. Rather than focusing on price alone, we encourage clients to consider the broader picture — ensuring the longevity and breadth of coverage so you can be sure you’re protected.
Key takeaways for choosing the right medical malpractice insurance company for you
- Don’t focus only on price: The cheapest option may leave you exposed to uncovered services or surprise out-of-pocket expenses.
- Assess the stability of your insurer: Ensure the company will be around when long-tail claims emerge.
- Understand your deductible: Know how much you’ll pay out-of-pocket for a claim before your insurance kicks in.
- Check location flexibility: Make sure your policy can adapt as your business grows or relocates.
- Ensure comprehensive service coverage: All your services, including expansions, should be included in your policy. Otherwise, know when you need to notify your professional liability insurance broker.
With these considerations in mind, you can choose malpractice insurance that doesn’t just meet your budget but also provides robust protection for your practice over the long term.
Click here to learn more about getting covered.
