Malpractice Premiums

ANPFNPGNP · Jun 7, 2008

Is it true that malpractice premiums for NPs increase drastically after the first year? One of my instructors for my BSN program didn't test for NP (after taking all the required classes) and stated that it was partly due to the high cost of malpractice insurance. I've found some information that supports her claims, but would like to hear it from those of you who are out there practicing. Thanks.

Your instructor probably just didn't pass her test! I paid around $850 a year for my malpractice insurance as an ANP/GNP. However, when I became a FNP and added children, it jumped to $1600/yr. I have the minimum that's required to be credentialed at all the local hospitals, even though I only practice in outpatient settings. Knock on wood, I've never been sued. I know a NP who has been sued once (it was settled out of court) and her premiums jumped to $2600/yr. The CRNA's I know are paying around $10,000/yr, but they're pulling down 200K annually in salary, so it averages out. I know a CNM whose premiums are $16,000/yr, but her employer pays it.

My PA friends are having to pay around $2,000/yr for their malpractice insurance, but they have a broader scope of practice.

Editorial Team / Admin · Jun 7, 2008

With http://www.nso.com (Nurses Service Organization), FNP new grad premium (full-time employee, not self-employed) in OK (1/6 coverage) is $935/yr.

Established NP premium is $1247/yr.

NSO applies discounted new grad premiums if apply within 1 year of graduation. Other liability carriers may do the same.

core0 · Jun 7, 2008

With www.nso.com (Nurses Service Organization), FNP new grad premium (full-time employee, not self-employed) in OK (1/6 coverage) is $935/yr.
Established NP premium is $1247/yr.
NSO applies discounted new grad premiums if apply within 1 year of graduation. Other liability carriers may do the same.

The other issue is that most of these policies are claims made policies. In claims made policies the premium starts low and rises every year until it stabilizes. This is because the first year (whether new grad or not) there is little exposure for the company since you have not treated many patients. Every year after that the exposure is whatever you did prior to that year plus what you did that year. This policy also requires a tail (this covers you in the future for issues that come up while the claims made policy is in force). This usually costs about 2x the final years policy. Make sure this is part of your contract.

Occurrence policies may still exist out there but they are rare. These cover you for the year that the policy was in force. They do not need tails since they essentially cover you forever for the year that the policy was in force. Because these are harder to value they tend to be more expensive and most companies have stopped writing them because they are so hard to value.

Here is a handout that helps:

http://www.eqgroup.com/Pdf/ClaimsMade_expl.pdf

and the AAPA discussion on this which also mentions prior act coverage:

http://www.aapa.org/gandp/risky.html

Generally the policy is fairly cheap and then increases every year until it is 2-4x the original value. At that time, assuming no claims, it levels off and increases with inflation (at least in my experience).

David Carpenter, PA-C

arak1547 · Jun 7, 2008

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"The other issue is that most of these policies are claims made policies. In claims made policies the premium starts low and rises every year until it stabilizes. This is because the first year (whether new grad or not) there is little exposure for the company since you have not treated many patients. Every year after that the exposure is whatever you did prior to that year plus what you did that year. This policy also requires a tail (this covers you in the future for issues that come up while the claims made policy is in force). This usually costs about 2x the final years policy. Make sure this is part of your contract."

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This makes sense and is probably what she is talking about. Thank you all for your input.