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Is Malpractice Insurance Mandatory?

California does not require physicians to carry malpractice insurance. Your employer might, the hospital you round in might, and the insurance company you contract with might. But malpractice insurance is not mandatory for a physician in private practice who takes cash.

The Cunningham Group is an insurance agent for physicians shopping for malpractice insurance, and this is the information they have about California.

Like 32 other states, CA doesn’t force you to have malpractice coverage.

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The Big Malpractice Players

  1. NORCAL Mutual Insurance Company
  2. The Doctors Company
  3. Medical Protective (MedPro) Insurance Company
  4. Coverys
  5. ProAssurance Corporation
  6. CNA Financial Corporation
  7. MagMutual Insurance Company
  8. The Dentists Insurance Company (TDIC)
  9. MLMIC Insurance Company (Now part of Berkshire Hathaway)
  10. SVMIC (State Volunteer Mutual Insurance Company)

This is a basic list of the largest malpractice insurance companies in California.

Practicing Without Malpractice Coverage

When you first start out, it’s hard to shell out $500/month for malpractice insurance. But that’s about what it will cost, especially when you first start out and especially when you are a primary care physician.

Many physicians choose to forgo malpractice insurance for the first few months or years in private practice, which is a topic we discussed before.

Family medicine and internal medicine doctors who don’t perform surgeries and have minimal in-office procedures pay the lowest annual premiums.

Direct primary care doctors also tend to be low on this list due to their small panel sizes. They usually save an extra 20% on their premiums even though, interestingly, their risk of litigation is more than 50% lower.

The Right to Arbitrate

Few physicians have an arbitration agreement in their patient contracts, but it’s something that most knowledgeable attorneys recommend.

Whether it’s reportable to NPDB that’s a different question and best left for your attorney to answer.

Just because you have malpractice insurance doesn’t mean you’ll be covered. Here is an unpleasant personal lesson from the Dr. Mo files.

Remember, lowering your malpractice risk is a much more effective investment than good malpractice insurance.

The Malpractice Insurance Mandate

If your state has a malpractice insurance mandate, it doesn’t mean that you are fully protected. Depending on your insurance carrier, they might have the habit of settling quickly or throwing minimal legal effort at the case.

Of course, once you’re sued, you’ll have to report it no matter what. But the outcome also matters in this complex healthcare system we have these days.

Getting legal help outside your malpractice insurance can still make sense when the case is more delicate.

The Cost of Malpractice Insurance

Each state and each city will have different costs. Furthermore, the procedures you do or don’t do and your inpatient privileges, years in practice, and previous malpractice history all factor into the annual premiums.

The average cost is somewhere in the $4k-6k $8-12k range per year for the average family medicine physician. These numbers have risen drastically over the past few years.

In some parts of CA, some family medicine doctors are paying well north of $12k/year. Shop around and make sure that you are fully informed as to what you’re getting.

Check out AutonomyMD, a subscription-based malpractice company, which I’ve written about in this article. A cheap way to get malpractice coverage and an EHR for your low-risk practice for less than $200/month.

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