Medical Malpractice Insurance 101: A Comprehensive Guide

every patient interaction carries risk

Every doctor will face tough cases, unexpected outcomes, and patients who aren’t happy with their results. Even when you provide great care, a lawsuit can still happen. That doesn’t mean you should lose sleep over it - it just means having the right coverage in place helps mitigate these risks and be there for you should an incident occur.

doctors who face the highest malpractice risk - and why they get sued

Malpractice lawsuits don’t always stem from major mistakes - miscommunication, unexpected outcomes, and patient dissatisfaction can all lead to claims. Some specialties face higher risks, larger payouts, and steeper insurance premiums due to the nature of their work.

Neurosurgeons – High-stakes procedures involving the brain and spine mean higher-risk claims and substantial payouts. Delayed diagnoses, post-op neurological issues, and surgical complications are among the top reasons neurosurgeons face lawsuits.
OB/GYNs – Obstetricians and gynecologists frequently face birth injury claims due to complications like failing to act on fetal distress, delaying a necessary C-section, or improper use of forceps or vacuums. These cases often involve multi-million dollar settlements.
General Surgeons – Frequent procedures mean increased exposure to wrong-site surgeries, retained instruments, and post-op infections. Even technically successful surgeries can lead to lawsuits if complications arise.
Orthopedic Surgeons – Spinal surgeries, joint replacements, and fracture repairs bring high patient expectations and significant legal risks. Lawsuits often stem from delayed diagnoses, post-surgical complications, and claims of improper surgical technique.
Plastic Surgeons – Patient satisfaction plays a bigger role in malpractice claims than in most other specialties. Lawsuits often stem from unexpected cosmetic results, surgical complications, or claims of inadequate informed consent.
Anesthesiologists – Even a small dosing miscalculation can have severe consequences. Malpractice claims often involve airway complications, nerve damage from regional anesthesia, or failure to properly monitor a patient’s vital signs.
Emergency Physicians – Working under high-pressure, time-sensitive conditions increases the risk of lawsuits. Missed heart attacks, strokes, or life-threatening conditions are some of the most common claims. Incomplete patient histories and split-second decisions add another layer of risk.

other doctors who often need their own coverage

Beyond high-risk specialties, some physicians may need additional or standalone coverage if their employer’s policy doesn’t fully protect them:

Fellows & Moonlighting Residents – Employer policies may not extend to outside work.
Locum Tenens & Telemedicine Doctors – Multi-state practice requires proper coverage across jurisdictions.
Medical Directors – If still seeing patients, they may need malpractice protection beyond administrative liability.
Concierge Physicians – Custom practice models often require tailored coverage.
Doctors Leaving a Claims-Made Policy – Need tail coverage to stay protected from past care.

The bottom line

Every doctor, regardless of specialty or state requirements, should seriously consider malpractice coverage. There’s too much at stake to leave it to chance. Malpractice insurance isn’t about expecting the worst - it’s about making sure a lawsuit doesn’t derail your career or finances. With the right coverage, you can focus on practicing medicine, not worrying about what-ifs.

How Does Medical Malpractice Insurance Work?

Even the best doctors can get sued, and even frivolous lawsuits can cost a fortune to defend. That’s where a solid policy steps in, covering legal fees, settlements, and judgments so that you’re not left footing the bill.

Here’s how the process typically unfolds:

A Patient Files a Claim
A patient (or their attorney) alleges medical negligence, claiming that an error in diagnosis, treatment, or procedural care resulted in harm. This might be a legitimate case or a completely meritless lawsuit - either way, you’ll need legal defense.
The Insurer Steps In
Once you report the claim, your malpractice insurance carrier assigns a legal team to your case. This includes attorney fees, court costs, and expert witnesses, which can add up quickly - even if the claim goes nowhere. Without coverage, you’d be paying for all of this out of pocket.
The Case is Resolved
There are three possible outcomes:
- Dismissal – Many malpractice claims are dropped or dismissed before trial.
- Settlement – If there’s a chance of a drawn-out legal battle, your insurer may negotiate a settlement. (This is where the consent-to-settle clause comes in - do you have a say in whether to settle or does the insurer make the call? We will discuss more about this policy clause further down the page).
- Trial Judgment – If the case goes to court, your insurance covers legal costs and any damages awarded, up to your policy limits.
Payouts Are Made if Necessary
If a settlement or judgment is issued against you, your policy covers the costs up to your coverage limits (e.g., $1M per claim, $3M aggregate per year - we will talk about limits later on here). Anything beyond that? You’re responsible for it.

Your‍ insurance carrier and their legal team will help you throughout this process, allowing you to stay focused on your practice.

Of course seek legal counsel for further clarification on malpractice lawsuits. This is from a broker's perspective.

‍

DrsCoverage provides medical malpractice insurance for physicians and surgeons graphic.

Without malpractice insurance, a doctor would be personally responsible for defense costs, settlements, and judgments. Even a lawsuit that never reaches trial can rack up six figures in legal fees.

Ready to find a policy that suits your practice needs and risk profile? ‍

Schedule a consultation today with a DrsCoverage medical malpractice insurance broker to discuss your needs or you can request your free quotes.

beyond lawsuit protection: what else does malpractice insurance cover?

Many policies offer additional protections that can be just as critical throughout your career. Some key benefits include:

Medical Board Defense Coverage – If you ever face an investigation, legal fees can add up fast. Certain policies help cover those costs.
Regulatory Support – Some policies provide assistance with HIPAA violations, Stark Law compliance, and Medicare audits.
Reputation Management – If your name or practice comes under public scrutiny, some policies help with crisis communication.
Contract Review & Employment Support – Some insurers offer legal guidance on employment contracts, group practice agreements, and partnership disputes.
Vicarious Liability Coverage – If you’re in a group practice, this protects against claims related to your colleagues’ actions.
Telemedicine Coverage – Practicing across multiple states? You need to ensure your policy extends across state lines.
Cyber Liability Protection – Most malpractice policies offer basic coverage for data breaches, but for full protection, a separate cyber policy would be necessary.

Malpractice insurance aims to ensure you and your practice are protected from the unexpected.

what malpractice Insurance doesn't cover

While malpractice insurance provides essential protection, there are some exclusions. Knowing what’s excluded is just as important as knowing what’s included. Here are some common ones:

Intentional Acts & Fraud – If a doctor is accused of fraud, patient abuse, or falsifying records, their policy won’t step in.
Billing Fraud & Regulatory Violations – Medicare/Medicaid fraud, coding errors, or improper billing practices are not covered. If a doctor is audited or found guilty of this, malpractice insurance won’t help.
Hospital Administration Errors – Issues related to hospital management, administrative policies, or leadership decisions fall outside the scope of malpractice coverage.
Employment-Related Claims – Malpractice insurance won’t cover wrongful termination, workplace discrimination, or other HR disputes - that requires separate employment practices liability insurance. We can get you an EPLI policy in addition to your professional liability policy if you're interested.
Sexual Misconduct Claims – Any allegations related to sexual misconduct, regardless of consent, are explicitly excluded.
Practicing Outside Your Specialty – If you perform procedures outside your licensed specialty, your insurer may deny coverage. This is particularly important for doctors expanding into aesthetics, concierge medicine, or elective procedures.
Geographic Limitations – Malpractice insurance often only applies within the covered territory. If you treat patients outside your policy’s jurisdiction - especially in telemedicine - your claim could be denied. You would need to expand your telemedicine coverage if you do practice outside state lines.
Off-the-Clock Care & Volunteer Work – Some policies exclude coverage for medical services provided outside your primary practice, including volunteer work, medical mission trips, or moonlighting - unless specifically endorsed in your policy. Let us know if you're needing a separate moonlighting policy.

Policy exclusions can lead to unexpected gaps in coverage, so it’s important to work with a broker to ensure you have the right policy with the right protections in place.

how to avoid coverage gaps

One of the biggest mistakes physicians make with malpractice insurance is assuming their policy covers everything. Coverage gaps can lead to costly surprises, so taking the time to understand what’s included - and what’s not - can prevent serious financial exposure.

Review your policy carefully – Never assume all risks are covered. Read the exclusions closely to avoid unexpected gaps in coverage.
Ask the right questions – Work with a knowledgeable broker who understands the nuances of malpractice policies and can help clarify potential gaps.
Consider additional coverage – You may need additional protection in cyber liability, regulatory defense, and tail insurance depending upon your current coverage and needs.

Malpractice insurance is designed to be a safety net, but it only works if it covers all potential areas of exposure. Taking the time to assess exclusions and policy limitations aims to ensure you’re fully protected when it matters most.

Consent-to-Settle Clause vs. Hammer Clause

One of the most overlooked yet critical aspects of a malpractice insurance policy is the Consent-to-Settle Clause. This provision determines whether a physician has the final say in settling a claim or if the insurance company can make that decision.

consent-to-settle clause

A true consent-to-settle clause means the insurer cannot settle a malpractice claim without the physician’s written approval. While this gives doctors more control over their legal defense, settlements - even without admitting fault - can have lasting consequences:

Damage to reputation – Settling a claim can lead to more lawsuits in the future.
National Practitioner Data Bank (NPDB) reporting – Settlements may be flagged in databases that hospitals, licensing boards, and employers review.
Impact on future insurability – Insurers will view past settlements as risk factors, which can make it harder to secure coverage later. Depending upon the severity of the claims history, a doctor could have a difficult time getting coverage from standard markets and will have to seek excess & surplus lines (which we can help with).

Some policies have "qualified consent-to-settle" language, meaning consent is required only under certain conditions. Reviewing this clause carefully is crucial if you want to have full control over settlement decisions.

hammer clause

A hammer clause is a provision that pressures physicians into settling by shifting financial risk onto them if they refuse.

If a doctor rejects a settlement recommended by the insurer and chooses to go to trial, the insurance company may only cover up to the proposed settlement amount - leaving the physician responsible for anything beyond that.

The hammer clause "hammers" the physician into settling by making it too financially risky to proceed to trial. Physicians should carefully review their policy if they want to ensure they retain decision-making power over their legal defense decisions.

a graphic showing an example of a hammer clause in a medical malpractice insurance policy

Most doctors don’t realize these clauses exist until they face a claim - at which point, it’s too late to renegotiate. This is where working with an experienced broker makes all the difference. A solid broker will walk you through your options so you can choose a policy that protects both your finances and your professional reputation.

Cyber Liability Insurance: Do You Have Enough Coverage?

Most standard malpractice insurance policies include some level of cyber liability coverage, but in today’s world, “some” may not be enough. Data breaches, ransomware attacks, and HIPAA violations are huge risks for doctors, and a basic malpractice policy probably won’t cover the full financial impact of a cyber event.

Many malpractice insurers offer basic cyber coverage, but here’s what that really means:

It might cover legal defense for HIPAA violations, but it won’t cover regulatory fines if a breach occurs.
It might help with data breach response, but business interruption losses from a cyberattack? Probably not.
It won’t cover the full forensic investigation, notification costs, or ransom payments if your system is locked by hackers.

This is why many physicians - especially those handling large volumes of patient data - choose to purchase separate cyber liability insurance for comprehensive protection.

The AMA and U.S. Department of Health & Human Services both provide guidance on best practices for securing patient data and minimizing cyber risks. But at the end of the day, your insurance coverage determines whether a breach is just a headache - or a financial disaster.

So, while some malpractice policies offer limited cyber coverage, it’s worth reviewing exactly what’s included and deciding if a separate cyber policy is necessary to fully protect your practice.

At DrsCoverage, we can get you quotes for a stand-alone cyber liability policy if you're interested.

claims-made vs. occurrence policies: what's the difference?

When choosing a malpractice policy, one of the biggest decisions you’ll make is whether to go with a claims-made or occurrence policy. They may sound similar, but they work very differently.

A claims-made policy only covers you if the claim is filed while the policy is active - which means if you switch jobs, retire, or stop paying for the policy, you’re no longer covered for past incidents unless you buy tail coverage. These policies start with lower premiums that increase as the policy matures.

An occurrence policy, on the other hand, covers any incident that happens during the policy period, no matter when the claim is filed. Even if a lawsuit comes up years later, you’re still covered - no tail insurance required. These policies cost more upfront, but they provide long-term coverage with stacked limits.

graphic showing the difference between claims made vs occurrence

For most physicians, claims-made policies are more common - but that also means understanding tail coverage is essential.

Next, we’ll take a deep dive into how tail coverage works and why it’s a critical part of malpractice protection.

what is tail coverage?

If you have a claims-made malpractice policy, tail coverage isn’t something you want to go without. It’s what protects you after you leave a job, retire, or close your practice - because even if you’re no longer seeing patients, lawsuits can still happen for past cases.

Here’s what you need to know:

It’s expensive. Tail coverage typically costs 150% to 200% of your final annual premium - which means if your last premium was $20,000, your tail could cost $30,000 to $40,000.
It lasts anywhere from a year to forever. Some policies let you buy short-term tail coverage, while others offer unlimited protection.

Many insurers offer flexible tail options, but they don’t come cheap. Some physicians take the risk of "going bare" - not buying tail coverage - but that’s a gamble that could cost far more than the premium.

Some providers include free tail coverage if you’ve maintained your policy for a set number of years or are retiring, but not all companies do. If your insurer doesn’t offer free tail, you’ll need to purchase a standalone policy to maintain coverage after your policy ends.

If you’re on a claims-made policy, tail insurance isn’t optional. And for new physicians, this is especially important - 97% of young doctors starting new jobs are placed on claims-made policies. So, whether you’re just getting started or thinking about winding down your career, you should have a plan for tail coverage.

What are medical malpractice insurance coverage "limits" and how do they work?

Most doctors don’t think much about coverage limits - until they get sued. But knowing what your policy actually covers is critical.

Malpractice insurance policies cap payouts based on two limits:

Per-Claim Limit – The most your policy will pay for a single claim.
Aggregate Limit – The total amount your insurer will pay for all claims during a policy year.

For example, a $1 million/$3 million policy covers up to $1 million per claim, but no more than $3 million total in a given year. That sounds like plenty, and for many doctors it's enough, but if multiple claims come in (especially for high-risk specialties), you can hit your limits fast.

a graphic showing common claim limits for doctors in a medical malpractice insurance policy

With 7.5% of physicians facing a claim each year, picking the right limits is something you want to highly consider.

how are legal defense costs handled in a malpractice policy?

Another overlooked detail in a malpractice policy is how legal defense costs are covered - and it can make a huge difference if ever faced with a lawsuit.

There are two main ways insurers handle these costs:

Defense Costs Inside the Limits (DCIL) – Your legal expenses (attorney fees, court costs, expert witnesses) come out of your total policy limits. If you have a $1M/$3M policy and legal fees rack up to $300,000, that leaves only $700,000 for settlements or judgments.
Defense Costs Outside the Limits (DCOL) – Legal defense costs are paid separately and do not reduce the amount available for claim payouts. This means that even if your legal fees hit $500,000, your full $1M per-claim limit is still available to cover settlements.

Why This Matters

A malpractice lawsuit - even one you win - can get expensive fast. A drawn-out legal battle can cost hundreds of thousands before it even reaches a settlement or verdict.

DCOL (Outside the Limits) is ideal for doctors who want stronger financial protection. Since legal fees don’t eat into their coverage limits, they won’t run out of protection if a case drags on.
DCIL (Inside the Limits) can lower premiums but comes with more risk. If legal costs add up quickly, there may be less money left to cover claim payouts.

Some insurers only offer Inside the Limits coverage, while others give doctors the option to choose. If you’re comparing policies, this is one of the most important details to check. The difference between these two structures could mean the difference between a covered claim and out-of-pocket costs if legal fees drain your policy limits.

Bottom line? Not all malpractice policies are built the same. Before signing, know how your policy handles legal costs - because a good defense only helps if there’s enough coverage left when it’s over.

‍

How Much Does Medical Malpractice Insurance Cost?

Doctors may think of malpractice insurance costs as a fixed number, but there’s more to it than that. The price of a policy depends on a few key things:

Your specialty. A general surgeon in Philadelphia might pay $49,500 annually, while one in Scranton pays closer to $41,000. OB/GYNs in high-risk states? Could be over $200,000 per year.
Your location. Some states have more lawsuits than others, and premiums reflect that. Practicing in New York, Florida, or California? Expect to pay more.
Your policy details. Coverage limits, deductibles, and how defense costs are handled all affect pricing.

a graphic showing the factors that affect the cost of medical malpractice insurance

how to lower malpractice insurance costs

Malpractice insurance is a major expense, but there are ways to reduce costs without sacrificing coverage quality. Here’s how:

Risk Management Education – Many insurers offer discounts to doctors who complete risk management courses. These programs help reduce liability risks and improve patient safety.
Policy Structure Adjustments – Choosing a higher deductible or claims-made policy can lower premiums.
Practice Enhancements – Regular audits, improved documentation, and patient feedback can help reduce malpractice risk.

How to Choose the Right Medical Malpractice Insurer

When selecting a malpractice insurer, financial stability should be your top priority. Claim payouts don’t just happen in the present - especially with occurrence-based policies, where insurers may need to cover claims years into the future. The last thing you want is an insurer that can’t pay claims when you need them most, though many are financially strong and sound.

To check an insurer’s strength, look at independent ratings.

These ratings indicate how financially secure an insurer is and whether they have a strong track record of paying claims. Always verify ratings before purchasing a policy.

You’ll also need to choose between different types of insurers:

Admitted Carriers – These are state-regulated and backed by state guaranty funds, offering additional protection.
Risk Retention Groups (RRGs) – Physician-owned groups that may offer dividend returns but lack state guaranty fund protection.
Excess and Surplus Lines – Specialize in high-risk specialties or complex cases that standard insurers may not cover.

Once you’ve narrowed down financially stable providers, compare policy costs, coverage details, and additional benefits to find the best fit for your practice.

What to look for when comparing policies

It's clear that not all malpractice policies are created equal. Before signing anything, pay attention to:

Coverage limits and deductibles – You don’t want to find out after the fact that you’re underinsured.
How defense costs are handled – Are they inside or outside your policy limits?
Geographic restrictions – Make sure your policy covers all the states where you practice, especially if you do telemedicine.
Additional services and covered procedures – Not every policy covers telemedicine, med spas, or part-time work - so please read the fine print - you may need additional coverage.

a graphic showing medical malpractice insurance policy considerations

Beyond coverage: professional support matters

A strong malpractice insurer offers more than just a policy - they provide tools and resources to help doctors manage risk. Look for:

Risk management education
Digital tools for claim filing
Experienced legal defense teams

Malpractice insurance isn’t just about having coverage - it’s about having the right coverage. Every insurer structures policies differently, and what works well for one doctor may not be the best fit for another.

And when it comes to a decision that could impact your entire career, that’s worth doing right.

the value of an independent insurance broker

Selecting the right coverage isn’t something most doctors have time to navigate alone. That’s where an independent insurance broker can be a game-changer. Unlike captive agents who only sell policies from one insurer, independent brokers have access to multiple carriers, allowing them to:

Compare policies across multiple A-rated insurers
Provide unbiased quotes based on your specialty and risk factors
Help assess coverage needs and policy gaps
Assist with policy management and renewals
Conduct annual coverage reviews to keep your protection up to date

How to Get Medical Malpractice Insurance Quotes

Getting the right malpractice insurance policy doesn’t have to be complicated, but working with an experienced broker can make a huge difference. Brokers like DrsCoverage have access to top A-rated carriers and non-standard markets, ensuring physicians can secure competitive quotes quickly - even for complex coverage needs.

Here’s how the process works:

Connect with a licensed broker – Whether it’s over the phone or via email, a professional broker will assess your specific needs and coverage requirements. If you prefer, a trusted office staff member can handle this on your behalf.
Use a recent carrier application – To expedite the quoting process, a recent malpractice insurance application can often be used to get initial indications from insurers.
Review carrier options – Once quotes are received, the physician selects the best carrier for their needs.
Complete formal applications – The chosen carrier’s official application must be filled out, along with any additional required documents for underwriting.
Underwriting review – Expect follow-up questions from the insurer to clarify details and confirm eligibility.
Policy binding – Once underwriting approves the application and payment is made, the policy is officially bound and the physician receives a certificate of insurance.

When to Start the Process

It’s best to start securing malpractice insurance 2-3 months in advance, especially if you’re switching carriers or need time to compare multiple options. This ensures no coverage gaps and allows adequate time to finalize underwriting requirements.

Working with a trusted brokerage firm like DrsCoverage makes the process smoother and more efficient, allowing you to focus on practicing medicine while they handle the details.

If you're interested in receiving no obligation quotes through a variety of carriers, you can either schedule a call with a DrsCoverage broker to discuss your needs, request quotes via our form, or email us with any questions. We look forward to serving you.

Medical Malpractice Insurance FAQs

What is medical malpractice insurance?

Medical malpractice insurance is a professional liability policy that protects doctors from lawsuits arising from patient care, including but not limited to:

Patient injuries
Misdiagnoses
Surgical errors
Allegations of negligence

It covers legal defense costs, settlements, and judgments, reducing the financial burden of a malpractice claim.

Policies vary based on:

Coverage limits – How much the insurer will pay per claim and per policy period.
Policy type – Claims-made vs. occurrence impacts when claims are covered.
Additional protections – Tail coverage, medical board defense, and cyber liability insurance.

The American Medical Association (AMA) provides insights on malpractice trends, helping doctors stay informed about legal risks in healthcare.

What's the difference between medical professional liability insurance and general liability insurance?

While both policies provide liability coverage, they protect against different risks:

Medical Professional Liability Insurance (Medical Malpractice Insurance) – Covers patient care-related lawsuits, including misdiagnoses, surgical errors, and treatment complications. If a patient sues for negligence, this is the policy that handles legal defense costs, settlements, and judgments.
General Liability Insurance – Covers non-medical risks, such as:
- Slip-and-fall accidents in the office.
- Property damage from an office-related incident.
- Advertising-related claims, like allegations of misleading marketing.

General liability does not cover malpractice claims. Most doctors need both policies - one for medical liability, the other for everyday business risks.

More Than a Policy,
A Strategy for Protection

Why Choose DrsCoverage?

Finding the right malpractice insurance isn’t just about picking a policy - it’s about making sure you’re covered where it matters. That’s where we come in. With deep industry experience, we help doctors cut through the complexity and connect with the right carrier and coverage for their needs. The process can feel overwhelming, but we make it straightforward, so you can focus on practicing medicine, not deciphering insurance fine print.

Experience

We are dedicated to protecting doctors, providing medical malpractice insurance and related coverages, including cyber liability, telemedicine, and tail coverage. Whether you’re a solo physician, a medical director overseeing a group, part of a surgical practice, a locum tenens provider, a concierge doctor, or running an urgent care center or med spa, we help you secure the right coverage for your needs. Backed by a team with over 100 years of combined industry experience, we know the complexities of medical liability inside and out - and we’re here to help you secure the right protection for your practice.

Advanced Carrier Access

We have access to top A-rated carriers for standard markets, as well as excess and surplus (E&S) insurance for non-standard risks. Whether you have a clean record or past claims that make coverage more challenging, we align doctors with carriers that will suit their coverage needs.

ongoing Policy Review

Whether you’re new to DrsCoverage or a long-term client, your coverage isn’t something we set and forget. We regularly review your policy to keep it aligned with changes in your practice. At each application and renewal, we take a proactive approach - identifying gaps and adjusting for new risks, aiming to help ensure you have the right protection as your career evolves.

Cost-Effective coverage

We’re committed to finding cost-effective coverage that doesn’t cut corners. Every doctor’s situation is different, which is why we take the time to assess your needs and tailor a policy that provides solid protection without unnecessary extras - so you get real value from your insurance investment.

no additional fees

Our services come at no extra cost to you - the insurance carrier pays the commission, so it doesn’t impact your premium. You get professional guidance, access to multiple carriers, and a tailored policy, all without paying a penny more.

Peace of Mind