What is Malpractice Insurance? (2025 Guide)

By Mark Fitzpatrick

Edited by Lukas Velunta

Updated: September 10, 2025

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Key Takeaways

Malpractice insurance provides financial protection when patients claim your medical care caused them harm.

It covers diagnostic errors and medication mistakes but excludes premises liability and cybersecurity breaches.

How much coverage you need depends on what kind of medicine you practice, where you work and what you have to lose. Coverage requirements vary significantly by state and specialty. Consult with a licensed insurance professional to determine appropriate limits for your specific situation.

What Is Malpractice Insurance?

Medical malpractice insurance, also called professional liability coverage, provides financial protection to health care professionals when patients claim poor care caused them harm. Most health care workers need this protection now, from doctors and nurses to midwives, physician assistants and nurse practitioners.

You can purchase malpractice insurance as a standalone policy or through your employer's group plan. When patients file claims against you, your coverage takes care of legal defense costs and any settlements or judgments up to your policy limits.

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What Does Malpractice Insurance Cover?

Not every lawsuit against a health care professional becomes a malpractice claim. Understanding your coverage gaps matters. You could face thousands in legal bills if you don't know the exclusions:


Diagnostic error claims	✅	A doctor dismissed a patient's chest pain as heartburn. It was actually a heart attack, and the patient sued for $500,000.
Medication administration mistakes	✅	A nurse accidentally administered 10mg instead of 1mg of morphine, causing respiratory depression that required ICU admission and resulted in a negligence claim.
Premises liability incidents	❌	A patient slipped on a wet floor in the waiting room and broke their hip, but this property-related injury requires general liability insurance, not malpractice coverage.
Emergency care outside your practice	✅	You helped at a car accident and the victim claims your first aid worsened their spinal injury. Good Samaritan coverage protects you with legal defense up to policy limits.
Cybersecurity breaches	❌	Hackers stole 5,000 patient records from your practice's server, triggering $50,000 in HIPAA fines that require separate cyber liability insurance to cover.
Informed consent violations	✅	A surgeon performed a procedure without explaining risks. When complications arose, the patient sued for lack of informed consent, which malpractice insurance defends.
Employment-related lawsuits	❌	A medical assistant sued for wrongful termination and sexual harassment, but these workplace issues need employment practices liability insurance, not malpractice coverage.
Telemedicine treatment errors	✅	During a video consultation, you missed signs of appendicitis that led to a ruptured appendix and emergency surgery, creating a telehealth malpractice claim your policy covers.

Coverage applies after any applicable deductible, which varies by policy type and insurer.

How Much Malpractice Insurance Do I Need?

Most states don't legally require medical malpractice insurance like they do commercial auto insurance, but understanding who needs it and why can help you make the right coverage decisions:

1
Professional Coverage Needs
Any health care professional who makes clinical decisions or provides hands-on patient care should carry professional malpractice insurance, including malpractice insurance for doctors, nurses and allied health workers like physical therapists and pharmacists. Even students and residents during training would benefit from having coverage.
2
Hospital Requirements
Most hospitals require substantial coverage to get hospital admitting privileges (the authorization hospitals grant doctors to admit and treat patients at their facility), usually several million dollars in protection.
3
Individual vs. Employer Coverage
Even if your employer provides group coverage, individual policies offer portable protection that follows you between jobs.

When choosing professional malpractice insurance coverage amounts, consider your specialty's lawsuit risk and practice setting. High-risk specialties like surgery face bigger payouts than family medicine, while solo practitioners typically need more coverage than hospital-employed doctors with institutional backup.

Your location and personal assets also matter. New York allows unlimited jury awards, while Texas caps non-economic damages at $250,000 per health care provider. If you have substantial assets to protect, you'll want coverage limits that match what you could lose in a lawsuit.

State requirements and damage caps vary significantly for healthcare professionals. This information is general guidance only.

Malpractice Insurance: Coverage Considerations

Health care looks different than it did five years ago, so your malpractice insurance policy should too. Check if your policy addresses these coverage gaps:

Telemedicine Protection

Virtual visits need the same liability coverage as office appointments. Check that your policy includes telehealth, especially if you see patients in other states.

Cybersecurity Coverage

According to the HIPAA Journal's 2024 Healthcare Data Breach Report, health care cyberattacks have become so common, with 277 million health care records being breached in 2024 alone. Ask your insurer about cyber liability coverage. It protects you from HIPAA fines and the costs of responding to data breaches.

Good Samaritan Protection

Whether you help at an accident scene or volunteer at a community health fair, your malpractice insurance should cover emergency care you provide outside your regular practice. Check your policy details, as coverage limits may apply to these situations.

Medical Malpractice: Bottom Line

Malpractice insurance provides specific financial protection for healthcare professionals. Malpractice insurance handles claims from diagnostic errors and medication mistakes, while cybersecurity breaches and premises liability require separate policies. Choose coverage amounts by balancing your specialty's risk level with practice setting, location and personal assets.

Medical Malpractice Insurance: FAQ

MoneyGeek's experts answered common questions about malpractice insurance:

How much does malpractice insurance cost?

Malpractice insurance costs vary by specialty, location and coverage limits. Nurses pay hundreds annually, while high-risk specialists like surgeons pay tens of thousands. Your state's legal environment and claims history also impact premiums.

Do nurses need malpractice insurance?

Nurses need individual malpractice insurance even with employer coverage. Employer policies protect facilities first. Individual coverage follows nurses between jobs and provides personal legal defense when needed.

What malpractice insurance do doctors need?

Doctors need malpractice coverage matching their specialty risk and hospital requirements. Family medicine physicians need lower coverage limits, while surgeons require much higher protection. Hospital privileges mandate several million dollars in coverage before doctors can practice.

What's the difference between claims-made and occurrence malpractice insurance?

Claims-made malpractice policies cover incidents reported during your policy period, while occurrence malpractice policies cover incidents that happened during coverage, regardless of reporting date. Claims-made policies require "tail coverage" when switching insurers to maintain protection.

Are malpractice insurance and professional liability insurance the same thing?

Malpractice insurance and professional liability insurance provide identical coverage with different names. Healthcare workers use "medical malpractice insurance," while other professionals like lawyers and consultants call it "professional liability insurance." The protection works identically regardless of terminology.

About Mark Fitzpatrick

Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.

Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!

Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.

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sources

National Association of Benefits and Insurance Professionals. "Malpractice Damage Caps by State." Accessed August 13, 2025.
Texas Legislature. "Civil Practice and Remedies Code Chapter 74. Medical Liability." Accessed August 13, 2025.
The HIPAA Journal. "2024 Healthcare Data Breach Report." Accessed August 13, 2025.
U.S. Department of Health and Human Services. "Telehealth Policy Updates." Accessed August 13, 2025.
National Library of Medicine. "Good Samaritan Laws." Accessed August 13, 2025.

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