Top 10 Factors Affecting the Cost of Professional Liability Insurance

Professional Liability Insurance, including Medical Malpractice Insurance, costs can vary tremendously among states and individual specialties and practices. Location is a key factor that can impact costs, for example, in California a doctor may pay over $5,000 for insurance whereas one operating in New York City may pay over $20,000 or even $100,000.

Let’s take a look at some of the factors that can affect medical malpractice costs in greater detail.

1. The Location of the Practice

A medical practitioner in the same specialty and with the same experience will pay dramatically different premiums based on location. Part of this has to do with state laws. Different states have different tort laws, and those with the most vigorous tort reforms tend to have lower premiums. States have different regulations regarding limits on policies. Those requiring higher limits will result in higher premiums

Finally, each state has a different insurance climate. Those states with higher payouts may experience higher premiums, and those states with a more competitive insurance market may see more competitive rates. When wondering “how much does malpractice insurance cost?” doctors need to consider their location first. Even the county or city where a professional practices can impact annual premiums costs.

For example, Rochester Counties in New York have an average premium rate of $7,185 for internal medicine while Long Island internal medicine specialists can expect to pay $37,877 annually.

2. Their Field or Specialty

Malpractice premiums by specialty vary widely because some practices are higher risk. Specialties are divided and classified by profession and broken down into additional categories, all of which can including varying costs and risks.

3. History With Claims and Losses

Most insurers will offer better premiums for professionals with no claims made against them, simply because such professionals present a lower claims risk. Professionals who have not had any claims against them in the past ten years will get the best rates. Those who have had multiple claims in that same period will pay more and may even find it challenging to get an insurance policy.

4. Who The Insurance Provider Is

Insurance providers in the same location will offer very different quotes, depending on their business model, overhead, application procedure and other factors. Professionals can work with an insurance broker to compare quotes from different providers. In many cases, this will yield a range of possible insurance costs and can help doctors find the most competitive rates.

5. Hours Worked

Longer hours mean higher risk. Longer hours mean more patients seen and more treatments offered, which means a higher possibility of an unfavorable result. Very long hours can also impact effectiveness and may be linked to unforeseen results.

6. Competition Among Insurers

When there are multiple insurance carriers vying for a market share of the state’s market, they will sometimes apply to the state Department of Insurance to file for lower premium rates to become more competitive.

7. Type of Practices and Specialties

A professional who works across state lines, offers services in multiple facilities or has other unique characteristics may find their premiums affected by these factors. Each practice and specialty and facility is different, which is why such a range of insurance costs exists.


8. Policy Limits

Policy limits refer to the maximum amount an insurer will pay in the event of a claim. In medical malpractice insurance, the limit is split. For example, a $1,000,000/$3,000,000 limit will pay a maximum of $1 million per claim and up to $3 million for all claims during the policy term. The higher the policy limit, the more protection it offers and the larger the premiums.

9. Types of Insurance Providers

True insurance companies carry higher premiums but also offer greater financial stability and more robust policy provisions. Insurance trusts offer lower premiums but less financial stability and more limited policies. Both have a vital role to play in the professional liability insurance marketplace, but the choice professionals make when selecting an insurance provider can have an impact on the premiums they pay.

10. Type of Coverage

Claims-made and Occurrence policies have different premiums. Occurrence policies, where available, are often preferred because they offer long-range coverage. If a professional pays for an occurrence policy and then ceases to pay that policy after a few years, they continue to be covered. If a claim occurs due to an event that took place while the professional was paying the policy, the professional is covered.


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