With nearly 115,347 active physicians, California has the most medical professionals in the country. Medical professionals in California must have medical malpractice insurance. Medical malpractice insurance can be confusing and overwhelming with different requirements and coverages.
This article explains the details of the latest medical malpractice insurance requirements in California and discusses other related topics that you should know about medical malpractice insurance in California.
California’s medical malpractice insurance requirements
In the state of California, there is no legal requirement for most practitioners to carry medical malpractice insurance. However, physicians are required to carry liability insurance in an outpatient surgery setting. The amount of insurance required, as with any doctor, is determined by the risk of the specialty being practiced.
Regardless of state law, many California hospitals and health centers require physicians to have medical malpractice insurance in order to be hired. The standard policy limits are $1 million per occurrence or claim and $3 million per annual aggregate.
California tort reform
California pioneered tort reform by enacting the Medical Injury Compensation Reform Act (MICRA) in 1975. Non-economic damages in medical malpractice cases were limited to $250,000 under the Act.
California, like many other states, was experiencing extremely high medical malpractice premiums, with insurance carriers threatening to leave the state. The legislation was enacted in response to the crisis and served as a model for subsequent states’ damage cap legislation.
Following tort reform in the state over the next several decades, the state did the following
- Imposed limits on attorney’s fees,
- Shared liability rules (if a patient is found liable for part of their injury, their award of damages is reduced in proportion to their fault),
- Implemented a new code requiring a patient to notify the healthcare provider of their intent to file a lawsuit at least 90 days before doing so.
- Under the Tort reform, the state sponsored a proposal to raise the state’s non-economic damages cap from $250,000 to over $1 million in 2014. However, the proposal failed by 67%.
Who needs medical malpractice insurance in California?
Anyone who works professionally in the medical industry in the California must have medical malpractice insurance. This coverage is required for the following professions:
Who pays for malpractice insurance in California?
Hospitals typically pay the malpractice insurance premiums for their employees’ doctors. Doctors who run their own practices usually pay for their own insurance.
Medical professionals who work for federal agencies, such as the U.S. Department of Veterans Affairs, are frequently exempt from the requirement to obtain malpractice insurance. The insurer is the federal government.
How much does medical malpractice insurance cost in California?
Malpractice insurance rates vary between professionals. As a result, we can’t say how much it will cost you because there are so many variables involved in determining your insurance rates.
However, we can provide you with some statistics and averages to help you understand where your rates may fall.
- Medical malpractice insurance typically costs $8,500 per year on the average in California.
- Annual premiums for surgeons in California typically range between $15,000and $20,000.
- Obstetrics and Gynecology specialists pay between $12,000 and $30,000 annually.
- Other medical professionals can expect to earn between $4k and $12k per year, depending on their specialty and area of expertise.
- Malpractice insurance costs approximately 3.2 percent of most physicians’ earnings.
While malpractice insurance can be an expensive monthly expense for surgeons, obstetricians have the highest rates of all.
These are just the averages. Be sure to shop around with a few carriers or work with a top broker like Simply Business, CoverWallet, ez.insure, or commercialinsurance.net to get and compare several quotes to find the cheapest one for you:
What does malpractice insurance cover in California?
Malpractice insurance protects doctors, lawyers, and other professionals from being held liable for events that injure or kill patients or clients. Malpractice insurance is required in California for physicians and other professionals.
Usually, the extent of the coverage depends on your insurer and the policy you buy. But in most cases, malpractice insurance covers you in the following areas:
- Attorney fees
- Court fees
- Arbitration costs
- Punitive and exemplary damages
- Medical expenses
Malpractice insurance types in California
Malpractice insurance is classified into three types:
Coverage for claims-made
This type of malpractice insurance covers events that occurred while the policy was in effect, as long as the claim was also filed during that time period.
For example, if you had this coverage from January to December 2022 and performed a procedure error in July 2022. This policy will cover you as long as the patient files a claim on or before by December 31, 2022.
Coverage of occurrences
This type of malpractice insurance protects against events that occur while the policy is in effect, even if the claim is filed after the policy has expired.
Using the above example, a claims made insurance will not cover you if your patients make a claim after December, 2022. However, an occurrence coverage will cover you even if the patient did not file a claim until February 2023 as long as you have the policy in effect.
This type of malpractice insurance covers claims made after the policy has expired, but only for events that occurred while you were covered. Tail insurance is typically purchased in addition to a claims-made policy.