NP Liability & Malpractice Insurance: What to Know
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“Individual malpractice insurance policies prioritize the NP’s interests first and provide additional policy benefits to help insure the NP’s career against risk exposure.”Kenn Plebanek, Underwriting Consulting Director, Affinity Healthcare Programs at CNA Insurance
Malpractice insurance, also known as professional liability insurance, protects nurse practitioners (NPs) from claims of negligence or incompetence, covering some or all of the costs of defending against such claims—and it’s more important than ever.
As growing numbers of NPs enter the workforce and take on higher levels of responsibility, liability claims will also inevitably increase. But not all liability insurance products are created equal, and some common myths may result in becoming vulnerable to a loss of time and money, as well as significant distress.
In 2022, CNA and the Nurses Services Organization (NSO) released the fifth edition of their Nurse Practitioner Liability Exposure Claim Report, which comprehensively analyzes the liability risks NPs are currently encountering. CNA and NSO have provided professional liability insurance to NPs since 1994, and currently issue insurance coverage to 30,000 NPs across the country. Their recent report examines claims against NPs closed between January 1, 2017, and December 31, 2021. By analyzing this data, the report offers key insights for NPs considering liability insurance in comparison to prior claim statistics.
While NPs can and should research a wide range of options before purchasing liability insurance, they must insure themselves adequately. Read on to learn more about what to know when it comes to liability insurance for NPs.
The Value of NP Liability & Malpractice Insurance
“Individual malpractice insurance policies prioritize the NP’s interests and provide additional policy benefits to help insure the NP’s career against risk exposure,” says Kenn Plebanek, the underwriting consulting director of affinity healthcare programs at CNA Insurance.
The value of liability insurance can be estimated partially by the cost of failing to purchase such coverage. Indemnity payments typically fall between $10,000 and $100,000, but there is a growing trend toward larger claim settlements. The average total incurred amount of professional liability claims grew more than 10.5 percent when comparing CNA’s reports from 2017 and 2022. The average amount incurred for a professional liability claim assessed against an NP during that timeframe is $332,137.
Even in cases that closed without an indemnity payment, the average total expense increased 11 percent over the same timeframe, to $26,349. The cost of defending allegations in license protection matters involving an NP has risen sharply, averaging $7,155 in 2022. These costs have thus increased 19.5 percent from the 2017 data set and 61.1 percent from the 2012 dataset.
If an NP lacks appropriate insurance, they must assume personal responsibility and liability for these expenses.
“All NPs should be covered by an individual malpractice policy, especially with respect to those NPs who render services in the most vulnerable settings,” Plebanek says. “For example, NPs who work in specialties such as obstetrics, women’s health, critical care, pediatrics, and neonatal care encounter significant levels of risk exposure. However, any NP may be sued or become subject to a state licensing board matter irrespective of their specialty.”
Although family nurse practitioners (FNPs) are the subject of the most claims, the neonatal and pediatric specialties have experienced the highest average total incurred professional liability claims primarily related to the costs of lifelong care required by an injured party. Nevertheless, all specialties require adequate insurance.
Moreover, even NP students are not immune from claims. While rare, the average total incurred amount for cases against NP students in the 2022 report was more than $200,000. These types of claims typically arise from situations that involve a lack of adequate supervision, or the treatment of high-acuity patients.
Refuting the Myths in Liability & Malpractice Insurance
Perhaps the most significant myth surrounding liability insurance for NPs is that employer-provided insurance is sufficient. However, NPs insured by their employers may not be covered by the terms and conditions of employer-provided insurance, whereas individual plans provide broader coverage.
“If an NP provides any medical advice to a friend or neighbor after work hours, performs volunteer work, or moonlights outside of a full-time position, having one’s own policy may be necessary, as an employer’s policy probably will not cover the NP for those exposures that are not related to the course and scope of the employment,” Plebanek says.
Employer-facilitated insurance plans are primarily designed to protect the needs and interests of the employer. While such a plan may be helpful to the NP, there may be gaps in coverage, as the policy will only cover duties the NP performs at their place of employment, and performed within the employer’s scope of practice. But depending upon the terms and conditions, an individual policy may cover an NP wherever they go, even if they change jobs.
“Moreover, an employer’s policy probably will not provide coverage for the employed NP for any state license protection matters,” Plebanek says. “Unfortunately, the NP’s employer often may report licensure matters against the NP to the licensing and disciplinary agency.”
Another pernicious myth is that NPs with liability insurance are more likely to face claims against them. But when a malpractice lawsuit is started, many plaintiffs will name everyone involved in patient care. Therefore, an NP with additional individual coverage may or may not be named in that litigation. Plebanek points out that disclosure of professional liability insurance is typically not required until the discovery phase of a lawsuit, so the plaintiff’s counsel may not be aware that the NP has an individual policy at the time of filing.
The Future of NP Liability & Malpractice Insurance
As more states adopt either increased or comprehensive practice authority for NPs, a similar increase in NP-owned practices is anticipated. Enhanced practice authority, coupled with more NPs becoming the primary source of insurance coverage for multiple parties, will increase liability exposure.
In addition to insuring themselves, NPs with their own practice must provide appropriate support to their staff. Insurance, however, represents only one portion of the equation. Sound risk management also calls upon NP-owned practices to strive for appropriate communication, thorough documentation, effective adverse event management, patient assessment, well-documented informed consent, and delineated treatment and referral processes.
Liability insurance can help to alleviate the inevitable stress associated with litigation. To obtain an insurance policy that meets their specific needs, NPs should explore multiple insurance providers before making a decision, but they should not delay that decision. Irrespective of the company, liability insurance remains the best frontline prescription for NPs everywhere.
Liability & Malpractice Insurance Resources for NPs
To learn more about the essentials of liability and malpractice insurance for NPs, check out some of the resources below.
- American Association of Nurse Practitioners (AANP): The premier professional organization for NPs of all specialties, AANP hosts a list of practice information by state, which is critical in determining what type of insurance an NP needs. They also have a one-page fact sheet on malpractice insurance for a quick refresh on the basics.
- CNA: Backed by more than 120 years of experience, CNA provides a broad range of insurance products and services for businesses and professionals in the US. Through its relationship with the Nurses Service Organization (NSO), it has been insuring NPs since 1994.
- Nurse Practitioner Professional Liability Exposure Claim Report (5th Edition): Released by CNA and NSO, this report provides a unique look at how malpractice and license defense claims have increased in cost, and how claim allegations and settings have changed over the years as the role of NPs in the healthcare community has grown and evolved.
- Nurses Service Organization (NSO): A provider of insurance to nursing professionals for more than 40 years, NSO also hosts an extensive library of articles, claim reports, case studies, and legal cases for education and risk management guidance on its website.