8 Reasons Your Employer’s Medical Malpractice Insurance Might Not Be Enough

You’re a healthcare professional who gets malpractice insurance through your employer. That means you’re protected from risk, right? Well, not necessarily.

There are a number of reasons your employer’s insurance might not be enough to protect you from the unique risks you face, from holes in the coverage they provide to inadequate settlement funds.

Luckily, you can help ensure that you have the malpractice coverage you need with your own individual policy. Also known as supplemental insurance, an individual malpractice policy can help complement the coverage you already receive from your primary, employer-provided policy. With supplemental coverage, you get additional protection for your career and financial well-being — not to mention peace of mind.

Why Your Employer’s Insurance Policy Might Not Fully Protect You

As a healthcare provider, you hope you’ll never have to face a malpractice lawsuit or licensing board complaint. But these things can happen, even through no fault of your own. And if the worst happens, the last thing you want is to realize your employer’s malpractice insurance won’t protect you.

In this article, we go over some of the reasons your employer-provided coverage could leave you at risk, as well as how to protect yourself before that happens. Plus, we’ll give you an idea of what you might expect to pay for an individual malpractice policy, based on your healthcare specialty.

1. There might not be enough funds to cover your settlement costs.

Like all malpractice insurance policies, your employer’s policy has a cap on the amount of money the insurance company can pay to settle a claim. If you’re named in a lawsuit and found liable for damages, this cap — known as the limit of liability — affects whether your employer’s insurance policy is able to fully cover your defense needs and settlement costs.

Employers typically have large limits, so their policies can usually cover an individual employee’s settlement costs. However, many malpractice lawsuits name multiple providers in the same suit, and that’s where the limits of liability can become an issue. For instance, if a patient at your hospital files a lawsuit against their entire care team — including you and a number of your colleagues — your employer’s insurance might be stretched too thin to cover all of your damages. When this happens, you could be left responsible for paying a potentially hefty malpractice settlement out of pocket.

However, if you have your own insurance, you get an additional cushion of financial protection: your supplemental malpractice policy can absorb the costs that aren’t covered by your employer’s policy.

2. Your employer’s insurance won’t provide an attorney who’s focused solely on your needs.

One of the most crucial functions of malpractice insurance is providing you with legal defense in the event of a lawsuit. If you’re named in a malpractice claim, you want a lawyer who will fight for you. But when your legal team is hired by your employer’s insurance provider, they’re not working for you: they’re working for your employer.

While this may not seem like a meaningful distinction, the fact that you don’t have your own dedicated legal representation can have serious ramifications. For example, what happens if there’s a conflict of interest and the attorney decides to pursue a legal defense that protects your employer — at your expense? You could be left out in the cold. Which brings us to our next point…

3. Your employer’s best interests & your best interests might conflict.

Say that you and the hospital where you work are named in the same malpractice lawsuit. Will the attorney hired by your employer’s insurance provider work to protect both you and your employer equally? Not necessarily. Even though you’re covered by the same policy, there’s always the chance that the hospital’s interests conflict with yours. In that case, the attorney might pursue a legal strategy that doesn’t necessarily protect you.

This is exactly what happened to one registered nurse who, due to overwork and understaffing, was sued for attempting to resuscitate a patient who had a do not resuscitate (DNR) order in place. The hospital was also named in the lawsuit, and its lawyer chose to focus on the hospital’s DNR rules rather than the working conditions that led to the error.

Effectively, this defense sought to protect the hospital at the expense of the RN. Luckily, she had her own lawyer, and she’d carefully documented the hospital’s chronic short-staffing, unsafe working conditions, and the staff’s inability to take breaks. Because she had her own legal defense, the RN was ultimately found not liable, and the hospital was required to compensate her for lost wages and the ordeal she endured. This case shows the importance of having your own insurance: you can’t always rely on the legal defense provided by your employer’s malpractice policy.

4. You may not be covered for licensing board complaints.

Your license to practice medicine is hugely important — the culmination of your years of study and hard work, and the key to maintaining your livelihood. But a complaint against your license can endanger all that.

According the National Practitioner Data Bank, there were 37,011 adverse actions against healthcare licenses in 2024, including 20,697 against nursing licenses alone. In fact, you may know someone who has been required to go before a licensing board and defend themselves — and you may be familiar with the potentially devastating consequences of losing a professional license.

Despite this, most employer-provided malpractice policies do not protect employees against license complaints. If you want your insurer to provide legal defense in the event of a licensing board action, it’s vital to have an individual policy. According to Michelle, a hospice RN and Berxi customer, “I bought malpractice insurance because I’ve heard about situations that brought good nurses before the licensing board.”

5. Contract workers often aren’t covered at all.

For contract workers, having your own insurance can be especially important: many workplaces don’t extend insurance coverage to contractors at all. The last thing you want is to learn the hard way that you’re not covered. But that’s exactly what happened to these healthcare professionals, who found out they weren’t insured or only partially insured after being sued for malpractice:

• The transplant RN who accidentally recorded the wrong medication dosage and then realized she wasn’t covered because she was a contractor.
• The self-employed cardiac nurse practitioner who was sued for wrongful death and found out he would have to pay for his own representation and defense.
• The contract occupational therapist who was found liable for malpractice and had to pay a $400,000 settlement out-of-pocket.

In addition, even if you’re a non-contract employee, you should be aware that your employer’s malpractice policy might have strict limitations on what it will cover. For instance, if you moonlight as an independent contractor, their policy likely won’t protect you in your outside work.

6. Many employers don’t cover HIPAA-related claims or reputation protection.

Malpractice insurance generally covers legal defense and settlement costs. But did you know that many employer-provided policies don’t extend to claims arising from HIPAA violations? If you’re sued for allegedly violating privacy rules in connection with private health information, you could find that your employer’s policy won’t protect you. But your individual insurance policy can help provide legal defense and reimburse you for the costs related to HIPAA proceedings, including fines.

The same is true for threats to your professional reputation. Though not usually covered by employers, a supplemental malpractice policy can provide you with a crisis management or public relations consultant to help clear your name.

7. If you leave your job, a gap in coverage could put you at risk.

It may sound obvious, but when you leave a job, you may no longer be covered by that employer’s insurance policy. But you can still face a malpractice claim arising from a past act or service. So how do you make sure you’re protected when your employment changes or you’re in between jobs?

That’s where your supplemental insurance policy comes in. If you maintain continuous individual malpractice coverage, you can have more peace of mind when you change jobs because your individual policy will cover you during any gap in employment.

8. Depositions aren’t always covered by employer-provided policies.

Let’s say you’re a witness in a lawsuit instead of a defendant. An attorney for one side of the case will want to take your sworn statement in deposition, and your responses will be recorded under oath.

This can be a nerve-racking experience. The attorney will ask questions about anything you did or witnessed that relates to the incident. Having your own attorney prepare you and represent your interests can help make you more comfortable with the process and your testimony. Your individual policy should provide that coverage, but your employer’s policy might not.

How Much Do Individual Medical Malpractice Insurance Policies Cost?

The cost of your supplemental malpractice insurance policy depends on a number of factors, including your location, the number of hours you work per week, your level of experience, and your claims history. The best way to find out how much your insurance might cost is to get a quote.

To give you an idea of what to expect, here are some typical starting costs of supplemental malpractice coverage for healthcare providers. These estimates are for claims-made policies with limits of liability of $1 million per claim and $3 million total, for professionals working 40 hours per week in Ohio:

• Registered nurse: $70/year
• LPN/LVN: $70/year
• Nurse practitioner: $1,200/year
• Physician assistant: $1,750/year
• Physical therapist: $110/year
• Occupational therapist: $80/year
• Optometrist: $310/year
• Psychologist: $370/year

What to Look for in an Individual Malpractice Insurance Policy

When shopping for malpractice insurance, there are a few things to consider, including the coverages offered, the claims service and customer support, and the carrier’s reputation and financial strength.

A good malpractice policy covers a lot more than just legal defense and settlements for malpractice lawsuits. Take Berxi’s coverage, for example. Our supplemental malpractice policies include:

• Licensing board protection
• HIPAA violation defense
• Reputation coverage
• Good Samaritan protection
• Worldwide coverage
• Consent to settle
• Wage loss and deposition expense coverage

It’s also important to choose an insurance provider who will be there to support you when you need them. At Berxi, when you call our support line, you’ll reach a real-life human being who’ll work hard to answer all of your questions. And if you ever need to file a claim, our world-class claims service team will support you every step of the way.

Finally, when it comes to insurance, financial strength matters. You want to choose an insurance company that has the resources and expertise to cover your settlement costs if needed. As part of Berkshire Hathaway Specialty Insurance Company, Berxi has an A++ financial strength rating. That means we have the financial backing to cover you when you need us.

Protect Yourself with an Individual Malpractice Policy from Berxi

No matter how diligent you are, there is always the chance you could face a malpractice claim or licensing board complaint. And, as we’ve seen, you can’t always count on your employer’s malpractice insurance to protect you.

If the worst happens, make sure you’re covered with comprehensive supplemental protection from Berxi. Our industry-leading financial strength, top-rated customer support, and expert claims service make us an easy choice for your individual malpractice policy. Plus, we sell directly to you, with no middlemen or broker fees, so our customers save an average of 20% versus industry standards. Learn more and get a quote today.

 

Image courtesy of iStock.com/FatCamera

Image courtesy of iStock.com/Ugur Karakoc

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The views expressed in this article are those of the author and do not necessarily reflect those of Berxi™ or Berkshire Hathaway Specialty Insurance Company. This article (subject to change without notice) is for informational purposes only, and does not constitute professional advice. Click here to read our full disclaimer