How Much Does Medical Malpractice Insurance Cost?

How much medical malpractice insurance costs is unique for every practice. Insurance carriers will offer a personalized quote based on your practice characteristics, history, and their risk tolerance.

It can feel like a challenge to find, evaluate, and select medical malpractice insurance coverage that makes sense for your practice. While medical malpractice insurance may seem expensive, a potential malpractice claim often costs significantly more. The good news is that there are factors that may lower your premium.

The cost of medical malpractice insurance depends on several factors

Common variables that medical malpractice insurance carriers consider when drafting a premium quote include:

• Size of your practice
• Geographic location
• Specialty
• Procedures
• Full-time or part-time
• Coverage history
• Claims history
• Type of coverage 
• Tail or prior acts coverage 
• Policy coverage limit

These factors can also determine eligibility for discounts. Dividend programs are another way to lower the cost of medical malpractice if your carrier offers them.

What is a dividend program?

Mutual insurance companies are owned by their policyholders, and many offer a dividend program. A dividend program allows mutual companies to share financial success with their member policyholders based on financial results.

Dividend programs offer excellent benefits for long-term policyholders, and to many, they are an incentive to join a mutual insurance carrier vs a stock company. When evaluating an insurance company, factor in the potential savings from its dividend program. This benefit may significantly lower your overall malpractice insurance cost.

Although dividends cannot be guaranteed, MICA’s board of trustees has awarded policyholder dividends yearly since 2005.

How often do malpractice insurance rates change?

There are two main reasons why a malpractice insurance policy rate would change over time: Claims-made step rated premiums and the overall market shifts.

A claims-made policy provides coverage for claims that are reported during an active policy period and occur after the policy’s retroactive date. When the retroactive date is equal to effective date, this is considered claims made year one as coverage is limited to claims that occur and are reported within the first policy period. Future policy periods that retain the original retroactive date will have greater potential for a claim to be reported as the exposure period increases.

Each annual increase is referred to as a claims-made step and continues until the exposure is considered mature, usually either year four or five depending on the carrier. Any changes to a medical practice, such as hours worked, medical specialty and territory, may also increase or decrease the premium.

Medical malpractice insurance policies are also defined by a “hard” or “soft” market. A hard market is characterized by higher premiums, fewer competitors, and less capacity to cover new clients. Meanwhile, in a soft market, we see lower premiums, broader coverage, higher capacity for competitive coverage limits as well as more competition.

In contrast, excessive jury awards, increased legal fees, and general inflation all contribute to creating a hard market. In states where there have been rollbacks in tort reform, rates can increase dramatically.

Many experts suggest that the country is now in a hard market, but it can also be hard to tell how recent factors—social and economic inflation, significant jury verdicts, and the long-term pandemic effects, may impact increasing rates. With that said, not every insurance carrier will raise rates or may increase their rates in smaller increments. At MICA, we focus on offering the best malpractice protection at competitive rates.