Definition of Liability Malpractice Insurance
Professional liability or malpractice insurance protects professionals who are sued by clients. Attorneys, physicians, and dentists are examples of professionals who purchase malpractice insurance. If a doctor acted incorrectly or failed to act, then his patient may have a viable malpractice claim.
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Benefits
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Malpractice insurance provides a defense for professionals. When a doctor is sued, his insurance company defends him against the claims. If the lawsuit is baseless, then the insurance company will not pay anything. However, if the case does not settle and the court enters a judgment for the client, then the insurance company will pay the award.
Significance
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Liability insurance does not provide infinite coverage. A lawyer who purchases a 100,000/300,000 policy typically receives $100,000 protection per incident and $300,000 total. If the lawyer is sued four times, then his personal assets like his house might be in jeopardy.
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Features
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Malpractice policies vary significantly. For example, liability insurance for a school might cover injuries that students receive while under a teacher's care. Insurance also might protect against allegations of employment discrimination.
Cost
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The cost of malpractice insurance can range from $10,000 to over $100,000. For example, a dentist who has been sued for negligence four times in the past six years will encounter higher rates.
Considerations
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Liability insurance premiums might be paid monthly, quarterly, semi-annually, or annually. Professional organizations, such as state or local bar associations for lawyers, often contract lower insurance rates for members.
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