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How Much Medical Malpractice Insurance Should You Purchase?

First few Article Sentences

As an insurance broker specializing in medical professional liability insurance, I am often asked this question. My usual response is, “What’s the most you could be sued for?” Naturally, it is not economically feasible for an individual physician or small physician group to purchase $10 million, or even $5 million of liability limits. There is no simple formula to determine the appropriate insurance limit, but I do readily advise physicians and small groups that a $1 million liability limit is woefully inadequate in 2018, regardless of specialty.

I started in the insurance business as an underwriting trainee for an insurer headquartered in a building known as the Pyramid, in San Francisco. The year was 1989; Ronald Reagan just completed his Presidency, the Berlin Wall was crumbling, the first internet service provider was beginning operations, and gasoline averaged about 97 cents. Can you guess what insurance limit of liability most small businesses purchased in 1989? Just as most physicians and small physician groups do today, most of those small retailers and corner grocery stores I underwrote purchased a $1 million limit of liability. When you adjust for overall inflation, that same $1 million limit is now worth just $499,000 in purchasing power. Using medical inflation rates, the current purchasing power would be far less.

Chesemore, Jim


Parker, Smith & Feek

Insurance, Malpractice

March 6, 2018

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