Each doctor must have malpractice insurance, but what are two factors that would influence the cost of premiums for a malpractice insurance policy. One cannot foresee unfortunate events that may occur and when will it result in a claim. Having malpractice insurance can protect you against this but of course, it will cost you money.
The amount that you need to pay will depend on different risk factors. Depending on your risks, the costs will be driven downwards or upwards. But the agents will be looking closing at those factors so that you won’t have to pay much.
In a nutshell, insurance risks pertain to the likelihood of you filing a claim. Meaning to say, the higher risks you have, the higher the likelihood of the insurance company to pay for you. This is in turn will result in increased policy prices. As the risk increases, the price will continue to increase. This is the means of insurance companies protect their investment to their customers.
So, what are two factors that would influence the cost of premiums for a malpractice insurance policy?
Factors Influences The Cost Of Premiums For A Malpractice Insurance Policy
Some of the malpractice risks can be controlled but others can be difficult to manage. But all of them equally impact the amount you need to pay for your coverage.
Factor #1. Coverage amount
This factor is fairly simple to understand. Buying more coverage would mean higher premiums costs. Similarly, if you opt for the higher deductible amount, then you can have savings on the cost of your coverage. Your independent agent will help analyze the amount of coverage that you should buy. Typically, this depends on several factors such as your worth as a medical practitioner. Furthermore, your facility may also require certain limits. In case you have minimum requirements, then you should buy lower than these limits.
Factor #2. Type of policy
Malpractice insurance policies are not the same. Buying a particular coverage type will cost more than buying its counterpart. Most often than not you can choose from two general insurance policies – claims-made and occurrence policies. Claims-made insurance policies only last for a specific term. But to get this coverage, both the claim and incident must take place within the insurance policy period. If you need coverage outside the policy term, a tail policy might be needed.
Occurrence insurance policies last for a specific term in years. But the difference here is that they continue providing coverage even after the expiration date.
Meaning to say, even though the claim is made few years after the insurance policy has expired, the limits will still apply. In general, occurrence policies tend to be more expensive. But with this policy, you need extra protection such as tail coverage. So when choosing the coverage, you need to consider the cumulative costs of the two.
Other Factors Affecting The Cost OF Premium
Other than the factors stated above, you also need to look at other factors including your specialty, history of claims, location, working hours, and staff size. Let us discuss each of them below.
Factor #1. Specialization
The coverage cost will also vary depending on your specialization. For instance, neurosurgeons have more expensive and sensitive work as compared to interns. This means that surgeons have more worth associated with the operating risks.
Factor #2. History of claims
Having previous claims would make the insurer assume that they have to cover your high risk. This will lead to an increase in your premium prices. But this may decrease over time if no claim has been filed against you after the other one.
Factor #3. Location
The majority of the liability policies are putting location risks as one consideration when setting premium rates. In other words, your practice location may influence the cost of your policy. Geography can cause a variation in costs. Medical practitioners in the city have different risks as compared to those in rural communities. As such, the premium will vary depending on the pool of risks in your area.
Factor #4. Working hours
Some physicians are only working part-time as they are working as a lecturer at the same time. But other doctors are working for longer hours and mainly see patients only. What I am trying to say here is that the frequency and length of time you work will affect the costs of your malpractice insurance costs. As a general rule, working only about twenty hours every week will most likely result in discounted rates. So, know how much does malpractice insurance cost.
Factor #5. Staff size
Some doctors are carrying insurance not just for themselves but also for their staff. This can be seen as group health coverage. If you add other people to your policy, then the cost will tend to increase. Removing them, on the other hand, will decrease the premiums. Make sure to update your policy, as soon as some leave take them out, and if another joins, add them to your policy even before they start working with you. You would want everyone to be covered. Read the four reasons you should update your life insurance policy.
It’s A Wrap!
Finally, you have an idea about what are two factors that would influence the cost of premiums for a malpractice insurance policy. You also get to know other factors that may likewise affect this. Anyway, you can read also about what is your life insurance based on the easy method. Do you want to know more about life insurance? If I were you to read and understand why does insurance often provides peace of mind. Thank you for reading!