Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail
Investing Answers Building and Protecting Your Wealth through Education Publisher of The Next Banks That Could Fail

Malpractice Insurance

What it is:

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.

How it works (Example):

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 it Matters:

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