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What are the Costs of Malpractice Insurance?

What are the Costs of Malpractice Insurance?
WHAT ARE THE MODERN TRENDS FOR MALPRACTICE INSURANCE COSTS?

Just as an individual's auto or home insurance policy will protect them from damages involving their car or residence malpractice insurance is used to protect professionals from financial damage incurred from liability due to their actions.  The most common view of malpractice insurance is that it is used by physicians.  Where this is true it is often obtained by most members of the medical community and is often a requirement for attorneys and other professionals. 

WHAT ARE THE COSTS ASSOCIATED WITH MALPRACTICE INSURANCE?

With medical malpractice comes with it the possibility for negligence resulting in damages awarded to the victim in astronomical numbers.  Depending on the in which a physician practices and they type of medicine that the physician practices in the yearly premiums can vary between $10,000 a year for general surgeons in Minnesota to $55,000 for OB/GYN's in the State of California. 

Legal professionals should also possess malpractice insurance.  Just as in the medical profession, the rates that attorney's are subject to vary from State to State and the area of practice.  The average cost of legal malpractice insurance can range from $5,000 to $8,000 with members of the bar who focus primarily on divorce, real-estate, and personal injury subject to rates at the higher end of the spectrum.

WHY ARE MALPRACTICE INSURANCE RATES SO HIGH?

As the awards, for both medical and legal malpractice, handed down through jury awards continue to rise, the costs that insurance companies charge for their protection increase.  Because of the larger threat of a detrimental effect on an insurance companies assets they require that the members of the pool pay more and more in order to keep the industry lucrative. 

In the past you have heard of "tort reform." Essentially this means the institution of new rules that would do various things to cap the amount of money damages that a victim of malpractice can receive through the awarding of non-economic damages, including pain & suffering and emotional distress.  Although there is no legal requirement that there be a cap on damages it has often come about where a judge will take the jury award and reduce the damages as he or she deems appropriate because of their excessive nature.

The battle over "tort reform" is one that is being waged primarily between the insurance companies, who tend to be the losers in excessive jury awards, and the attorneys who stand to gain, especially when they take a case on a contingency basis.

IS MALPRACTICE INSURANCE REQUIRED?

As of today the only State in the Union that requires mandatory legal malpractice insurance is Oregon.  As of 2009 the average cost of that insurance was $1,800 per year.  Even though it is not mandatory many States, twenty-eight (28) as of 2011, require an attorney to disclose to his/her client that attorney's possession, or lack thereof, satisfactory legal malpractice insurance.

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