What is the Difference Between Liability and Malpractice Insurance?
Casualty insurance is a broad term used to describe third-party insurance policies. Also known as liability insurance, this type of coverage generally protects a business or individual from damages they might have caused intentionally or accidentally to another party. There are many different kinds of liability insurance, and a major one is malpractice insurance. The difference between liability and malpractice insurance is simply that a malpractice policy is a variety of liability policy, which focuses specifically on protecting doctors, lawyers and other professionals if a client claims damages.
Perhaps the best known kind of liability and malpractice insurance is medical malpractice insurance. This type of insurance policy is geared toward medical professionals. It could be triggered, for example, if a doctor is sued by a patient for causing harm during a surgical operation. A patient might also bring a lawsuit if a medical professional fails to properly diagnose a condition or disease.
Typically, such a policy works like any other type of property or casualty insurance. Medical professionals shop for malpractice insurance through their insurance broker or agent. Every year, they must either renew with their current malpractice insurance company or search for cheaper or better insurance from another insurance company. The medical professional pays an annual premium for their coverage, which protects him or her up to a certain limit. Medical malpractice coverage can also include legal fees that a medical professional might have if they are sued.
Other types of liability insurance include professional liability insurance, which is similar to medical malpractice insurance but can be designed for other professionals, such as lawyers, architects and engineers. Professional liability insurance is similar to other liability and malpractice insurance products. It is meant to protect the lawyer or architect in the event that a clients, partner, or other third party claims that they were harmed financially or otherwise while the professional was providing services. The professional pays his or her professional liability insurance company a set premium each year for a certain amount of insurance coverage.
Depending on the nature of a company and its size, a business enterprise might seek to purchase other kinds of liability and malpractice insurance. For larger organizations with a board and executives, directors and officers liability insurance could provide protection to the company and those individual officers if they are sued by investors. Another kind of liability and malpractice insurance is errors and omissions insurance. This kind of insurance is very similar to professional liability insurance in that it protects professionals like accountants and insurance agents if they fail to provide proper advice to a client and the client then seeks damages from them.
When I lived and worked in Florida, I talked with many professionals in the medical field, and the number one concern for doctors at that time was the number of malpractice lawsuits filed by patients and how these suits were forcing doctors to pay more money for malpractice liability insurance.
I talked with several doctors who were taking extreme measures to avoid the cost of higher insurance. I spoke with several who were leaving the state to practice in states where they could practice with lower insurance rates and caps on lawsuits. One doctor decided to close his practice and retire early rather than continue to try to make money in a system with such high insurance costs.
@Animandel - I don't doubt that doctors pay well for medical liability malpractice insurance, but I'm not going to spend a lot of time feeling sorry for them. Regardless of what doctors and hospitals have to pay for insurance they are going to charge the rates so they can stick to their desired profit margins. The insurance companies and the doctors are feeding from the same plate and the system works for both parties.
I find it outrageous the amount of money doctors have to spend on malpractice insurance costs. We wonder why medical fees in the United States are so high. Well, one place to start the search for ways to cut medical costs is with the cost of liability malpractice insurance.
If doctors and hospitals want to stay in business then they have to charge high rates because there is no way a medical professional can work without adequate insurance, and medical centers and hospitals can't remain open without insurance.
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