What is Malpractice Insurance?

Malpractice insurance is liability insurance for doctors and other health care professionals.

How Does Malpractice Insurance Work?

Let's say John Doe needs surgery to amputate his left foot. The doctor removes the right foot by mistake. John Doe understandably is very upset and sues the doctor for malpractice. A jury awards him $15 million. The doctor does not personally have $15 million plus attorney's fees: His malpractice insurance policy covers the costs.

Why Does Malpractice Insurance Matter?

Malpractice insurance pays for the mistakes health care professionals make due to negligence or harmful decisions. The premium can be very high, and these premiums are a controversial cost of doing business that contribute to the cost of medical care. In many states, most health care providers are required to carry malpractice insurance.