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Malpractice Insurance

Malpractice insurance, or professional liability insurance, is errors and omissions insurance for certain professionals. Malpractice occurs when a professional's conduct is negligent or fails to meet the basic standards of the profession. If the professional, such as a dentist, makes a mistake that the ordinary professional in that field would not make, the professional may be held liable for malpractice.

In order to protect against the risk of a malpractice action, professionals can purchase malpractice insurance. Some professionals are required to obtain malpractice insurance to be licensed to practice their professions. Malpractice insurance is available for doctors, dentists, lawyers, accountants, real estate agents, and other professionals.

Like most liability policies, malpractice insurance can be purchased with various deductibles and limits of insurance. An important item to consider in some malpractice policies is whether the limits of insurance include the costs of defense. Like most liability insurance, the policy requires the insurance company to defend the insured against a claim. However, defending a malpractice action can be costly, and if the limits of insurance are exceeded by the costs of defense, the insured may find himself or herself paying a large judgment out of personal assets.

Malpractice insurance can be written on a claims made or an occurrence basis. A claims made policy covers all claims filed against the professional during the time the policy is in effect. Under a claims made policy, the damage may have occurred prior to the time the policy was in effect, but the claim would still be covered if it were filed during the policy period. An occurrence policy covers bodily injury or property damage that occurs during the time the policy is in effect. If the claim for injury is made after the policy period ends, the insurer would still provide coverage if the injury occurred during the policy period. For that reason, lawyers recommend that professionals keep their occurrence policy documents even after the policy period has ended.

Like many other types of insurance, the premium for malpractice insurance can vary based on the professional's business. Doctors who practice certain specialties in which there are more malpractice claims and larger potential verdicts, such as obstetrics, will pay more than doctors who practice in specialties in which there is less malpractice litigation.

Malpractice does not include deliberate actions. A professional who commits fraud or a crime will not be covered by malpractice insurance. In addition, if the alleged error is outside the practice of the profession, malpractice insurance will not cover the loss. For instance, an attorney who injures someone in a car accident is not acting in his or her role as an attorney and will not be covered by malpractice insurance.

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