Medical indemnity insurance

What is medical indemnity insurance?

Medical indemnity insurance gives important coverage in the event of a professional negligence claim. Claims can be financially devastating for medical practitioners. A claim can result in expensive compensation payouts as well as the additional costs associated with legal fees and disruption to a business.

Why might I consider medical indemnity insurance?

With medical malpractice insurance, which is a type of business insurance, the cost of legal representation and compensation is covered. Medical liability insurance is important because it protects you in and out of the workplace, provides financial support to cover legal fees, covers the cost of compensation and allows you to help patients without worrying about the potential legal risks of your actions.

What type of errors can medical professionals and healthcare workers make?

Misdiagnosis.

No matter how skilled a healthcare practitioner you are, mistakes can be made. The majority of medical negligence cases involves misdiagnosis or delayed diagnosis. The last thing you want is a patient claiming malpractice when you aren't covered; the financial burden could be overwhelming.

Incorrect medication.

This can cover you when a patient is prescribed the wrong drug, receives the incorrect dosage or is given another patient's medication.

Prenatal care and childbirth negligence.

Childbirth and care involves a huge amount of risk. If something goes wrong, it's often that parents feel the doctors and midwife are responsible. Insurance can help cover you should you be accused of negligence.

Administrative errors and omissions.

You can sometimes be overwhelmed by paperwork and inevitably, mistakes can happen. Whether it's a communication breakdown or a situation that leads to wrong medication being prescribed, getting insured can help if something goes wrong.

What can happen if there is medical negligence?

If a patient believes they have been harmed or injured due to substandard care, they can seek financial compensation from the health practitioner. Depending on the injury sustained, the patient can claim the following types of compensation:

• General damages. This refers to compensation for the pain and suffering endured by the patient as a result of medical malpractice. It includes financial recompense for a lower life expectancy, reduced enjoyment of life and reduced faculties.
• Future loss of earnings. A patient can claim compensation for the earnings they would have received if not for the injury or harm caused by medical negligence.
• Past loss of earnings. If a patient has been unable to work because of the injuries or harm they experienced due to medical negligence, they can claim damages for the earnings they lost in this period.
• Exemplary damages. A healthcare practitioner guilty of medical malpractice may also face additional damages as a form of punishment. This typically occurs when the practitioner's actions have caused grievous harm and in cases where there is a high degree of recklessness.
• Special damages. This compensation applies to the past and ongoing cost of medical treatment the patient will need for rehabilitation. It includes related expenses such as in-house care and home modifications that are required as a result of the injuries.
• Griffith V Kerkemeyer damages. A patient can claim on behalf of friends and family who provide gratuitous services for their care.

Who can use medical malpractice insurance?

Medical malpractice insurance can be used by a broad spectrum of healthcare professionals and centres. Those covered include:

Doctors and surgeons

If you are a medical student, a doctor employed in hospital, a specialist, a surgeon, or a GP, you are eligible for medical malpractice insurance. This cover also is extended to retired doctors. A doctor who retires is able to apply for "run-off" insurance to be protected against claims made for past incidents that have not yet been reported.

Note: Even if you are a doctor employed at a hospital, you should take out medical malpractice liability insurance just in case you are not covered by the hospital's insurance policy.

Medical clinics

A medical clinic is at high risk of medical malpractice claims. A small failure in standard protocol such as misdiagnosis and patient privacy breaches can result in multiple claims.

Tattoo Artists

A tattoo artist or parlour can be held liable if a client experiences infection, scarring, or injury resulting from the procedure.

Clinical trials

A clinical trial comes with great risk of medical malpractice claims. If a patient believes they were not sufficiently warned about the possible side effects of the trial, the owners of the trial may be held professionally liable. In these situations, medical malpractice insurance can provide protection.

Pathology laboratories

Medical malpractice insurance can be used by pathology laboratories to protect them from potential negligence cases due to misreporting diagnostic results, delays in testing samples or failure to follow proper diagnostic procedure.

What are the common features of medical malpractice insurance?

Medical malpractice insurance provides comprehensive coverage to both healthcare professionals and healthcare establishments. Common features of a medical malpractice insurance policy for an individual includes coverage for the following:

• Civil liability. This provides cover for claims against the healthcare service provided for example breaches in patient privacy.
• Vicarious liability. If a medical practitioner or locum doctor commits an error or omission, medical malpractice insurance will provide cover for the damages.
• Statutory liability. This feature covers the defence costs for proceedings brought under OH&S or environmental law. It also provides cover for any fines or civil penalties imposed on the healthcare practitioner.
• Public relations expenses. To help protect the health professional reputation, medical malpractice insurance will typically help pay for the cost of the public relations expenses needed to counter negative press.
• Medicare audits and investigations. Covers legal defense and representation costs for Services Australia and Professional Services Review (PSR) inquiries into billing practices (fraudulent or dishonest conduct is strictly excluded).
• Court attendance and advancement of claim investigation costs. For healthcare establishments, a typical medical malpractice insurance policy will include cover for civil liabilities, Good Samaritan acts, fundraising and social activities, investigation costs, loss of and property damage claims. For a private practice, most policies will offer up to $20 million to cover civil liabilities.

Make sure you read the PDS

Finder research suggests 23% of Australians can't be bothered reading the PDS. Check the PDS to make sure you are covered for what you need.

How can I get the best medical malpractice insurance?

There is a wide range of roles in the healthcare industry, that's why you need to get cover catered specifically to you.

If you work in aged care, for example, the risks you face are different from those of a surgeon. In aged care, the leading causes of claims paid are resident falls (42.7%), so making sure you're not excluded from these incidents would be important. You can check out our occupation specific guides here:

• Nurses
• Physiotherapists

Talk to a broker about medical indemnity insurance

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FAQs

• Is medical indemnity insurance mandatory for registration in Australia?

  Yes, all registered health practitioners must have professional indemnity insurance arrangements in place to meet AHPRA registration standards. Failure to maintain appropriate cover can lead to the suspension of your registration or disciplinary action by the relevant national board.

• What is the Run-off Cover Scheme (ROCS)?

  The Run-off Cover Scheme is an Australian Government initiative that ensures eligible doctors who have retired or permanently left the private workforce receive ongoing medical indemnity protection for past practice. While the scheme is funded via an industry-wide levy on active medical indemnity contracts, no additional premium is payable by the eligible practitioner once they enter the scheme.

• Does medical indemnity insurance cover Good Samaritan acts?

  Yes, most Australian medical indemnity policies provide automatic cover for Good Samaritan acts where a practitioner provides emergency medical assistance outside of their normal clinical environment. This protection applies even if the assistance is provided in a field where the practitioner does not normally specialise.

• Are medical students required to pay for their own indemnity insurance?

  No, medical students in Australia can typically access free student membership and indemnity cover from Medical Defence Organisations (MDOs). While universities often provide basic liability cover for clinical placements, students are encouraged to hold their own individual membership for additional legal support and protection.

• Does medical indemnity insurance cover telehealth services?

  Yes, medical indemnity policies generally cover telehealth consultations provided the practitioner is registered in Australia and practicing within their scope of expertise. Practitioners must ensure their policy extends to patients located outside their home state or territory and check for specific exclusions regarding international consultations.

• Is medical indemnity insurance tax deductible for employees?

  Yes, you can claim the cost of your medical indemnity insurance premiums as a work-related expense on your tax return. This applies as long as the insurance is a requirement for your employment and the cost has not been reimbursed by your employer.

Written by

Richard Laycock

Editor

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Richard Laycock is Finder’s insights editor after spending the last five years writing and editing articles about insurance. His musings can be found across the web including on MoneyMag, Yahoo Finance and Travel Weekly. Richard studied Media at Macquarie University and The Missouri School of Journalism and has a Tier 1 Certification in General Advice for Life Insurance. See full bio

Co-written by

James Martin

Journalist

James Martin was the insurance editor at Finder. He has written on a range of insurance and finance topics for over 7 years. James often shares his insurance expertise as a media spokesperson and has appeared on Prime 7 News, Insurance News, 7NEWS and The Guardian. An experienced journalist, James' work has featured in publications including The Irish Times, Companies100 and In Business. He holds a Tier 1 General Insurance (General Advice) certification and a Tier 1 Generic Knowledge certification, both of which meet the requirements of ASIC Regulatory Guide 146 (RG146). See full bio

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