Nursing Malpractice Insurance: What Is It, and Why Might I Need It?
Key takeaways:
Malpractice insurance is necessary in the healthcare field to protect individual providers and institutions. Malpractice claims can be made by a patient, a patient’s representative, or the state’s board of nursing.
Hospitals and other employers purchase policies that cover most nurses hired by them. But some nurses may opt to go a step further and buy their own policy as additional protection.
Private practice nurses will likely need to purchase their own insurance to cover their healthcare practice.
There are many reasons that a nurse may need to purchase liability insurance for malpractice — whether they are working for an institution or in private practice. For those who need it, it is a relatively inexpensive way to provide legal protection against malpractice claims.
We’ll go over malpractice insurance as it relates to the nursing profession, who needs it, what it covers, and how to use it.
Types of nursing malpractice or professional liability insurance
Malpractice insurance is for charges associated with malpractice — claims of negligence or omission against a healthcare provider that resulted in a patient’s injury, loss, or death.
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These policies typically cover attorneys’ fees, court fees, document fees, any fines resulting from the claim, and the claimant’s damages or medical bills to remedy the issue. These policies may also include the possibility for settlement outside the court system.
There are two types of liability insurance: claims-made and occurrence.
Claims-made policies
These policies cover any claim made during the policy period that has been purchased and paid for. This can be useful when there is a delay between when an event occurred and when the claim is made. While the policy is active, it will provide protection. Once the policy lapses, the coverage period ends and no claims will be paid.
In contrast to occurrence policies, claims-made policies will often come with a retroactive date that will serve as the starting point for the policy period itself. Any incidents occurring before that date will not be considered covered under the policy.
Occurrence policies
These policies provide coverage for life but only for the time period in which payments were made. Any claim made for incidents occurring during the time period of payment, regardless of when filed, is covered.
Malpractice insurance coverage basics
Nurses can have claims filed against them for a number of reasons. Some of the most common include:
Failing to assess a patient properly
Failing to escalate important information about patients
Failing to stay within the scope of practice
Fulfilling an order that contains an error
Medication errors
Not following orders as prescribed
A nurse’s malpractice insurance provides payment to claimants rather than advancing the claim further to a possible trial. Avoiding costly litigation benefits the practitioner, the claimant, and the insurance company. The average nurse’s malpractice claim is $164,586; the average cost to purchase a plan is about $35 per month.
Typical liability coverage
Most plans provide professional liability coverage up to $1 million for each claim. Any claim that results in an obligation to pay will be covered as long as it is a covered medical incident under the definitions of the policy. Some policies will pay up to $3 million per appropriate claim or more for all covered claims during the policy period.
Many plans also offer speciality coverage and added benefits, such as payments for defense attorneys, assault coverage, coverage for damage to property of others, first-aid expenses, sexual misconduct/abuse, HIPAA abuses, and deposition representation. Reading the fine print or consulting with a healthcare attorney ensures that the plan will cover the right areas for each unique practice.
It’s important to remember that any claims made during the policy year could result in an increased premium the following year. Obviously, it’s in your best interest as well as those of your patients and the insurance carrier that you avoid malpractice claims whenever possible.
Exclusions from typical coverage
Typical exclusions in a medical malpractice policy include a variety of claims that hinge on dishonesty, sexual misconduct, or illegal acts. Typical exclusion provisions will include a refusal to pay for sexual harrasment claims from patients, claims that resulted from reckless disregard on the part of the practitioner, and various hospital administration issues.
If a claim is filed because of any mistakes or errors made by the hospital administration or staff, the injured party should file a malpractice claim against the hospital’s insurance, not the individual provider.
Hospitals vs. private practice
Hospitals typically purchase blanket coverage plans to cover a range of liability issues that commonly affect hospital systems and that cover all nursing staff and practitioners, including advanced practice nurses. Additional coverage outside of the hospital’s plan is available for individual purchase for extra peace of mind. Human resources departments should have information about each hospital’s specific plan.
In private practice, policies differ greatly and are required to provide protection. Depending on the speciality and scope of practice, coverage will vary.
Certified nurse midwives (CNMs) are the most difficult private practice to find coverage for, and it can be very expensive especially if it covers home-based births, with many CNMs unable to find affordable coverage due to state licensing laws.
Coverage varies for Nurse Practitioners in price depending on practice specifics. Requesting quotes from different companies can provide important context on which policy is best for each practice.
Finding coverage that’s best for you
There are many insurance companies that offer coverage to nurses, and a quick search online will yield multiple options to compare. The definition of a covered incident in each policy will differ, so you need to evaluate whether that definition will appropriately cover your practice.
It’s important to understand that an insurance policy is a legally binding document between you and the insurance company. Take the time to read the entire document, and make sure that the risk areas you specified in your initial conversation are covered.
At the end of the day, the only thing that matters is what the document says. Any phone conversations, text messages, or emails you might have sent detailing your need for a particular kind of coverage won’t matter to a judge if it isn’t in the final policy. Insurance companies are in business to make money, and they do so by excluding certain claims and categories of coverage.
Finally, remember that any appropriate job-related expenses are tax-deductible, so ask a tax accountant or advisor for more information about deducting the cost of malpractice insurance.
The bottom line
Malpractice insurance is a strong protection against the unknowns involved in clinical practice. Plans are relatively inexpensive for the peace of mind and reassurance they bring — that if a malpractice claim is made, legal coverage is available.
There are many options that cover the unique vulnerabilities facing advanced clinical practice and individual nursing licenses so that providers can continue serving patients with needed medical care.
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References
Daviss, B., et al. (2021). Pivoting to childbirth at home or in freestanding birth centers in the US during COVID-19: Safety, economics and logistics. Frontiers in Sociology.
O’Neill, S.P. (2021). Individual nurse liability insurance. American Nurse Journal.
