Malpractice Insurance for Nurses: Answers to Your Top Questions

When it comes to malpractice insurance for nurses, there can be a lot more questions than answers. What does it cover? Do you need it? And of course, how much will it cost you?

As a nurse, you’re probably aware that a malpractice claim can have a huge impact on your life, career, and finances. You may have even seen firsthand the potentially devastating effects of a lawsuit on one of your peers. So you know malpractice insurance for nurses is important, but frankly, you’ve got more pressing things to worry about than deciphering insurance jargon. We get it, and we’re here to help.

In this article, we’ll cut through any confusion and tell you exactly what nursing malpractice insurance is, break down what it typically will (and won’t) protect you from, identify some of the most common reasons nurses are sued for malpractice, and help you with what to consider when deciding if you need it.

What Is Malpractice Insurance for Nurses?

Malpractice insurance for nurses is a type of professional liability insurance that protects nurses when a patient or a patient’s representative sues them for making a mistake. The nurse may be named individually or as part of a group of defendants (as in the medical team assigned to the patient). Medical malpractice is generally defined as a negligent act (i.e., doing the wrong thing) or omission (i.e., not doing something you should have) that leads to an injury, loss, or death.

Regardless of whether you actually made the mistake, a malpractice lawsuit can be an enormous financial burden. There are the legal costs of defending yourself against the claim, as well as court fees, lost wages, and more. In addition, if you settle the lawsuit or are found responsible by the court, you’ll have to pay for damages. This usually comes as a financial settlement.

When you buy a medical malpractice insurance policy, you’re protecting yourself from the financial blow of a malpractice claim: The insurance company will help you cover the costs associated with the lawsuit.

But just as nursing is more than a simple source of income, malpractice insurance for nurses is about a lot more than money. Here are some ways malpractice insurance helps nurses.

Protection & Support for You & Your Livelihood

A malpractice claim not only impacts your finances, but it can also threaten your nursing license, damage your reputation, and consume your valuable time – not to mention the emotional toll it takes on you mentally.

Nursing malpractice insurance won’t take all the stress of a claim away, but it does reduce the financial burden. The insurance provider puts a dedicated attorney and a team of claims professionals in your corner to help you through the ordeal. This confidence in knowing you’re protected if a covered malpractice claim is filed, can prevent some sleepless nights.

Whether you’re an RN, LPN, LVN, nurse practitioner, or even a student nurse, malpractice insurance for nurses is essential. “As any healthcare professional knows, bad outcomes do occur, regardless of how diligent you are,” says Adam Yasan, managing director of our team at Berxi. “Mistakes happen, communication lines get crossed, and a patient or family member may get a false impression of wrongdoing. When the worst happens, malpractice insurance for nurses is specifically designed to protect you, your financial well-being, and your career.”

What Does Malpractice Insurance Cover for Nurses?

Coverage varies widely by policy and the company you choose, but malpractice insurance for nurses can cover the following expenses:

• Settlement and claim costs
• Defense counsel and legal fees
• Defense for licensing board actions
• Lost wages and travel expenses
• HIPAA violations
• Reputation protection
• Good Samaritan coverage

Read on for more information about what you should expect from your nursing malpractice coverage regarding each of these expenses.

Settlement & Claim Costs

A settlement is the amount of money a nurse is required to pay to the person suing them. This is either through an agreement reached between the defendant (the nurse) and plaintiff (the patient or patient’s family) before the lawsuit goes to trial or a court-ordered payment if they’re found liable for malpractice.

The dollar amount of settlements is determined not only by the bodily injury and medical expenses of the patient but also the pain, suffering, and emotional distress experienced by the patient or their family.

The amount your insurance company will pay to cover your settlement or claim costs is determined by the limits of liability that you choose for your policy. The limits of liability are the maximum amounts that your insurance company will pay, both per claim and in total during the policy period (which is usually a year). A typical range for the limits of liability might be $1 million/$3 million. This means you’re covered for up to $1 million per claim and up to $3 million for multiple claims per policy period.

When choosing malpractice insurance for nurses, you may want to look for a company that offers consent to settle, such as Berxi. This means that the company will work with your defense attorney to reach the best possible outcome for you and won’t settle a claim without your approval. This is important if you are certain you didn’t do anything wrong and don’t want to admit fault, even if it means avoiding trial.

In addition to paying the settlement amount, defendants are often required to pay pre-judgment and post-judgment interest to the patient or their family. This interest can be substantial, especially if it takes a long time for a case to get resolved. These interest payments are also covered under a policy from Berxi.

Defense Counsel & Legal Fees

Your insurance company will cover the costs of your attorney to help you throughout the lawsuit, as well as any other associated defense costs, such as legal fees, court fees, and expert witness expenses. Even before the case goes to a trial, your attorney will investigate the claim, work with you to develop a defense strategy, and connect with the patient’s (or their family’s) lawyers.

Your attorney represents your interests, not those of the insurance company or your employer, and you’ll enjoy fully confidential attorney-client privilege with your defense lawyer.

The costs of your defense counsel and legal fees are usually “outside the limits of liability,” which means that legal fees don’t cut into the total amount your insurance company will spend on damages you may need to pay. So if you have a $1 million limit of liability per claim, you will still have the full $1 million to pay for any potential settlement, even after your insurance company covers the cost of your lawyer and legal fees.

Defense for Licensing Board Actions

Your nursing license is hugely important – the culmination of your years of study and hard work, and the key to your ability to practice medicine and nursing, while maintaining your livelihood. Licensing board actions and investigations can be a serious threats to your license and reputation, and because they don’t necessarily have to be tied to a malpractice claim, they’re a lot more common than you may think: According to the National Practitioner Data Bank (NPDB), nurses in 2020 were, on average, 47 times more likely to face an adverse board action than a medical malpractice payment.

Malpractice insurance for nurses can help protect you against licensing board actions or investigations – but only if you have the right kind of policy. When a nurse is covered by their employer’s malpractice insurance policy, the coverage often doesn’t extend to defense for licensing board actions. This is one of the reasons why it’s so important for nurses to carry their own malpractice policy independent of their employer’s.

When choosing an extra insurance policy, you should be sure to look for a policy that covers licensing board protection. For example, Berxi’s malpractice insurance for nurses provides $25,000 per policy period for license defense.

Lost Wages & Travel Expenses

When dealing with a malpractice suit, you may have to miss work for depositions, hearings, and more. In addition, you’ll have to get to each of these sessions, which can cost money. Most nursing malpractice policies will pay you for some of the wages you lost from missing work, as well as your travel expenses.

HIPAA Violations

As you know, nurses today have to be extremely careful about HIPAA violations. If a malpractice claim alleges that you violated a patient’s private information, some nursing insurance policies provide you with access to counsel and will reimburse you for costs related to proceedings (such as licensing board actions) – including relevant HIPAA fines.

This is another area where your employer’s insurance likely won’t cover you, so without supplemental malpractice insurance for nurses, you might be on your own if accused of a privacy violation. Therefore, if you want defense and financial protection for HIPAA-related claims, it’s important to have your own insurance outside of your employer’s policy.

Reputation Protection

Not all insurers offer it, but protection for your reputation can be a lifesaver in the face of a public assault on your character and qualifications as a nurse. If you face a threat to your professional reputation, some malpractice insurers can provide you with a crisis management or public relations consultant to help clear your name. For instance, Berxi’s malpractice insurance for nurses offers up to $50,000 per policy period for professional reputation protection.

Good Samaritan Coverage

If you provide professional care to someone who is not your patient in a first aid or emergency situation, and that person files a claim against you, specific malpractice insurance will still have you covered. This is known as Good Samaritan coverage and should be considered when choosing your provider.

What Are the Most Common Causes of Malpractice Claims?

Those are some of the main expenses covered by malpractice insurance for nurses, but what causes nursing malpractice claims in the first place? Some of the most common medical errors that can result in malpractice lawsuits include:

• Adverse drug reactions
• Burns
• Equipment failures
• Failure to provide prophylactic treatment
• Falls
• Improper transfusions
• Misdiagnosis, delay in diagnosis, or failure to utilize the appropriate test, as well as a failure to act on lab results
• Mistaken patient identities
• Pressure ulcers and deep vein thromboses
• Suicides
• Restraint-related death
• Under- and-overtreatment or errors in administering treatment

Do Nurses Need Malpractice Insurance?

The short answer? Yes. According to the NPDB, of the total number of medical malpractice payments made from 2012 to 2022, 26% were from non-physicians. What’s more, the average total costs of malpractice claims are mind-boggling, especially when you consider paying them without the financial safety net of malpractice insurance: Based on data collected in the NPDB, between 2015 and 2022, the average medical malpractice payment for RNs was $359,826.

In addition to protection against the financial burden of a malpractice suit, there are other factors to consider when deciding whether you need insurance. If you’re a nurse who meets any of the following qualifications, you should definitely consider purchasing malpractice insurance, whether or not you’re covered by your employer:

• You run your own clinic or private practice.
• You want a comprehensive supplemental policy in case your employer’s policy doesn’t cover you completely.
• You want your own policy so you can have more control over the legal team and decisions made on your behalf.
• You moonlight or do medical work outside of your typical job description.
• You’re an independent contractor.
• You want coverage for things your employer’s policy doesn’t cover (e.g., HIPAA or board actions).
• You’re a student doing clinicals.
• You want an additional financial cushion to fight claims.

I’m Covered by My Employer – Do I Need My Own Policy?

A common misconception among nurses is that because they receive insurance through their employer’s policy, they don’t need to purchase their own supplemental insurance policy. While your employer-provided insurance might cover you if you’re named in a malpractice lawsuit, there are a number of benefits to having your own policy.

• Legal defense for licensing board actions, which is often not covered by employer policies.
• Protection in HIPAA-related claims and actions. This is also usually not covered by your employer.
• Extra funds, which can be helpful if many members of the team are named in the same suit as you.
• Personal legal counsel. Having your own policy means you are the main point of contact with your defense team.
• Control over deciding whether or not to settle. Employer policies might be more likely to force your hand.
• Reputation coverage, which is usually not provided by employer policies.

Supplemental malpractice insurance gives nurses across the country the financial support and peace of mind they need to survive a malpractice claim – and everything that comes with it. When Berxi asked their customers why they bought supplemental coverage, one nurse practitioner named Michael responded by saying: “I purchased malpractice insurance due to the fact that I can never tell when an employer would separate from a suit and leave it with me.” And that concept probably makes a lot of sense to many nursing professionals, especially when policies can cost less than $100 a year (see more information about cost below).

How Much Is Malpractice Insurance for Nurses?

A number of factors will determine the cost of your nursing malpractice insurance. Here are some considerations that will affect how much you pay for your policy:

Profession

This is one of the main factors – if you are an RN, you have a lower level of risk than an NP, and so your policy premium will be less expensive.

Policy Limits

The cost of your policy will also depend on your limits of liability. For instance, a policy with liability limits of $500,000 per claim and $1.5 million aggregate will cost less than a policy with limits of $1 million per claim and $3 million aggregate.

Location

Due to variations in regulations and litigious climates, malpractice insurance costs can vary widely by state.

Provider

Costs will vary by insurance company, and it’s important to shop around and compare different providers based on your needs.

Type of Insurance

There are two types of insurance policies: occurrence policies and claims-made policies. An occurrence policy covers a claim that arises from services performed during the policy period. This coverage can apply even if the claim is brought after the policy expires. This explains why an occurrence policy tends to be the more expensive of the two types.

A claims-made policy is primarily focused on when a claim is made. If you have a claims-made policy and a claim is made during the policy period, then the insurance applies. This policy is typically less expensive than an occurrence policy, but its cost increases over the first five years before leveling out.

Working Hours

Insurers consider full-time nurses more of a risk compared to part-time nurses, which means that policies for full-timers tend to be more expensive.

History

If you’ve had malpractice claims in the past, your policy will likely be more expensive than that of someone who has no previous claims against them.

How You Buy – Broker, Agent, or Direct

There are three general ways to buy insurance: through a broker, through an agent, or directly from an insurer. When you buy through a broker or agent, there are often fees and commission costs involved, which means you can pay 15-20% more than if you buy directly from an insurer like Berxi. Learn more in the following section.

So How Much Does It Cost?

To give you a general sense of what to expect, here are some average starting costs for occurrence policies from Berxi, all with liability limits of $1 million per claim and $3 million aggregate:

• RN, LPN & LVN: around $81/year
• Family nurse practitioner: around $1,131/year
• Psychiatric mental health nurse practitioner: around $889/year
• Student nurse (externship): around $20/year
• Student nurse practitioner (externship): around $230/year

Keep in mind that for nurse practitioners, claims-made policies from Berxi are also available, and the starting prices tend to be significantly lower. And of course, the best way to figure out how much malpractice insurance will cost you is to compare quotes from different companies. Get an online quote in minutes.

How to Get Malpractice Insurance for Nurses

Buying malpractice insurance for nurses involves getting quotes from different providers based on your needs and what you want covered, then choosing the provider that offers you the right mix of protection and affordability. There are three main ways to shop for and buy insurance: through a broker, through an agent, or directly from the insurance company.

Buying Through a Broker

An insurance broker – also known as a producer – acts as an intermediary between you and the insurance companies. They will essentially get quotes from different companies and do the cross-comparison for you. They technically act on insurance buyer’s behalf.

While it may save you some legwork to use an insurance broker, it can also increase your costs: Brokers usually make a commission on each sale from the insurance company, often as a percentage of your annual payment. This can increase the cost of your policy year after year.

Buying Through an Agent

An insurance agent is similar to a broker in that they’re both intermediaries between providers and customers, but agents act on behalf of the insurance companies. Like brokers, some agents make commissions on sales.

Also interesting to note: Some professional organizations act as agents and are known as program administrators. This means they too earn a commission on the policy being purchased.

Buying Directly From an Insurance Provider

Buying directly from an insurance provider, rather than through a broker or agent, just means that you cut out the go-between and purchase your insurance from the insurance company itself. While this model is less common, it has a number of benefits – especially savings. This is because there aren’t any commission fees and other costs associated with buying your policy; in fact, when you buy directly from Berxi, you can save up to 20%.

Buying direct can be a lot quicker and easier than the alternatives since you can get online quotes in minutes. You can even purchase your policy in just a few clicks. Plus, you can then access all of your insurance documents, renew your policy, and manage your account through a self-service online portal. And finally, you’ll have the benefit of a direct relationship with your insurer, rather than being mediated by a third party.

Final Thoughts

Ready to take the next steps toward getting your own nursing malpractice insurance? Here are some things to consider during the process, as well as some final tips and action items for how to find the right policy at the right price:

• Shop around. Get quotes from a number of different providers and compare them. Consider factors like deductibles and commission fees when comparing costs.
• Think about how much coverage you need. Based on the average payments for nursing malpractice claims and other information in this guide, you should consider what limits of liability you’ll want.
• Consider the additional coverage you want. Do you want a policy that provides defense counsel outside the limits of liability? How about reputation protection? Consent to settle? Defense regarding alleged HIPAA violations? Not all policies are created equal. Consider what you want to be protected against.
• Find out what’s covered by your employer’s policy. If you have automatic malpractice coverage provided by your employer, you’ll want to check for potential blind spots, such as licensing board defense coverage. It may be worth looking into these gaps and learning how supplemental coverage can help.
• Find a company you trust. It’s worth looking into the reputation, trustworthiness, and financial strength rating of the provider before making your final decision.
• Don’t forget about ease of use and access. While some companies allow you to do everything online – including getting a quote, purchasing a policy, accessing your important documents, and renewing – others aren’t as easy to use. If this is important to you, take it into account in your decision-making process.

When buying malpractice insurance for nurses, don’t lose sight of the fact that you are the top priority. Finding the right insurance is a matter of protecting your livelihood, and it can give you the peace of mind you need to continue providing essential care to your patients.

 

Image courtesy of istock.com/PeopleImages

 

Last updated on Jul 24, 2024.
Originally published on Oct 27, 2023.

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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