Making A Practice of Malpractice Insurance

August 9th, 2011

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By , BSN, RN

You insure your car, you insure your home, you insure your health—it seems reasonable that you should insure your livelihood, too. Malpractice insurance isn't just for doctors, but it has been a source of much controversy and misinformation in nursing for a very long time.

Malpractice or Professional Liability Insurance is insurance that physicians and most other medical providers carry in case he or she is sued for medical malpractice. Malpractice is a medical error which results in a bad outcome and is proven to have been caused by gross negligence or deviation from the standard of care.

Because of the increase in the number of malpractice lawsuits against health professionals, nurses are advised in many areas to carry their own liability coverage. What malpractice insurance typically covers is the cost of a defense attorney, the settlement or judgment (up to the policy limits) if the case is lost, and depending on the type of policy, license defense for the nurse if she is brought up before her state board of nursing. In a survey by the American Nurses Association two years ago, just less than half of respondent nurses said they carried personal liability insurance.

Most hospitals have liability insurance which covers all employees, including nurses; however, smaller facilities, like walk-in clinics may not. A physician or a hospital can be sued because of the negligent conduct of a nurse, and nurses can be sued and held liable for negligence or malpractice. Hospitals have been known to countersue nurses when they have been found negligent, and the hospital was required to pay. It pays to keep in mind, even if the hospital provides liability insurance for its employees, the insurance company's only loyalty is to the hospital — and they will try to recoup their payout if they think it feasible.

Do You Share Your Knowledge?

Another reason to consider carrying your own malpractice insurance is the "volunteer" factor. Nurses are nurses 24-7, often providing services outside of employment related activities, like first aid at a child's sporting event or taking part in health screenings and education services at health fairs. Giving is good, and many nurses volunteer at free clinics which offer sovereign immunity; however, that doesn't stop people from suing, and you will need a lawyer to help with the defense process. Do take into account the fact that policies do not cover work outside of the nurses' scope of practice.

One long-standing myth about having malpractice insurance is that it will actually increase a nurse's risk of being sued. This just isn't true. First of all, if you don't tell anyone you have insurance, no one will know, except you and the insurance company. Secondly, the decision on who to name in a lawsuit is not based on who has insurance, and it isn't until after the suit is filed that that inquiry is even made.

Now, once suit has been brought against you, having personal liability insurance might keep you in a lawsuit. In the past, not having insurance benefited nurses because attorneys would drop them from lawsuits since they usually didn't make very much money. But let's face it: today, nurses are being paid much more, and in some areas, there is a value to keeping them as part of a suit.

One of the biggest reasons this myth is bad news is complaints. You may not get sued in court, but more and more complaints are being filed with state boards of nursing. Whether or not the complaint is valid, a nurse needs someone to fight on her side with the board. Nurses often agree to restrictions on their license because they don't have the financial resources to fight. Insurance can solve that.

Is Malpractice Insurance Cost Effective?

And speaking of financial resources, personal liability insurance for nurses is a whole different issue than for physicians. Physicians pay thousands of dollars every year for their malpractice insurance. For nurses, the cost is unlikely to be more than a couple hundred dollars per year. Some ads you see in nursing magazines and on nursing websites report the insurance costing as little as $10 a month. Even in these troubled financial times, doubling that would still be very small compared to how much you lose if you can't work.

One piece of advice found when researching this topic — and that made absolute sense — was don't over-insure. Don't have higher limits than a physician. For example, in Florida, doctor's typically carry $250,000 in malpractice coverage. There are nursing policies out there that cover up to a million dollars in damages. You can make yourself a target unnecessarily.

Insurance experts also suggest checking if the insurance is an "occurrence" policy, covering incidents which happened while the policy is in effect, or a "claims-made" policy, which only covers if the claim is filed while the policy is active. They also suggest nurses who change jobs purchase a "tail" policy. It will cover acts committed prior to accepting a new job.

You will hear different opinions on keeping your own malpractice policy from every nurse you ask. For me, I want to protect myself, my livelihood and my financial future. A couple of hundred dollars a year seems worth it.

One Response to “Making A Practice of Malpractice Insurance”

  1. eQuoteMD Says:

    This is a great “introductory” article. I especially like how you dispel the myth about carrying insurance could increase the risk of lawsuit.

    Medical malpractice insurance can be quite “tricky” for some specialties and products other than nursing though.

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