Decoding malpractice premiums: Insider insights every physician should know

Jennifer Wiggins

Malpractice insurance is one of the largest fixed costs a physician faces — yet most doctors have no idea how their premiums are calculated, why they fluctuate, or what they can do to control them. In this article, we’re breaking down the key factors that go into determining your malpractice premium and sharing insider tips every physician should know when it comes to evaluating costs.

1. Specialty is king

The single biggest factor influencing your malpractice premium is your specialty. High-risk specialties like neurosurgery, OB/GYN, and orthopedic surgery typically carry much higher premiums than lower-risk fields such as dermatology or psychiatry.

Within each specialty, most carriers also use subspecialty classifications to further define risk — such as “no surgery,” “minor surgery,” or “major surgery”. These distinctions matter and can significantly impact pricing.

Tip: If you practice in multiple specialties or have a hybrid role, be sure your policy reflects your actual scope of services. You may be able to structure your coverage in a way that reduces your premium while still protecting your full scope of work.

2. Location, location, location

Your practice location(s) play a major role in how your malpractice premium is calculated. Not only do rates vary by state, but even different counties within the same state can carry dramatically different pricing based on local claim frequency and severity. If you’re practicing in more than one location — whether through telemedicine, locums, or a multi-site practice — the premium will be influenced by the rating in each location and the percentage of time you practice there.

Underwriters typically apply a blended rate or assign a primary territory based on where the majority of your work occurs, but if one of your locations is in a high-risk region, it can drive the cost up significantly.

Tip: If you're considering adding a new practice location or accepting work in another state, talk to your broker before committing. A good broker can help you get preliminary premium estimates and show you how the coverage may be rated based on your time spent in each place — helping you avoid surprises and make an informed decision.

3. Policy type: Occurrence vs. claims-made

The type of policy you choose – Occurrence vs. Claims-Made – has a significant impact on your premium. Occurrence policies tend to be more expensive upfront but include automatic tail coverage. Claims-made policies are usually cheaper in the early years but require a separate tail policy once you cancel the coverage.

Tip: Claims-made premiums increase gradually over time, typically maturing over 5 years. If you’re reviewing a first-year quote, ask for projections for future years so you’re not surprised by the standard step increases — which are often mistaken for price hikes. Also, plan ahead for tail coverage, which usually costs 150–200% of the mature premium and is paid as a lump sum when the policy ends.

4. Policy Limits Matter — But Not as Much as You Think

While your coverage limits (e.g., $1 million/$3 million) do affect premium, the price difference between standard limit options is often marginal. What matters most is that your limits are appropriate — not too low and not unnecessarily high.

Too-low limits can leave you exposed if a claim exceeds your policy’s maximum payout. In these cases, any excess judgment could become a personal financial liability. On the other hand, excessively high limits can sometimes attract unwanted attention from plaintiff attorneys, who may be more aggressive when they believe there’s a “deep pocket” to pursue.

Tip: Aim for the right-size coverage based on your specialty, location, and risk profile. Your limits should satisfy state requirements and credentialing standards, while also aligning with your actual exposure. A trusted broker can help you find that balance and avoid over- or under-insuring your practice.

5. Claims history and risk profile

A physician’s personal claims history, board actions, or disciplinary issues can impact their ability to obtain favorable coverage — and often result in surcharges or placement with a non-standard carrier.

However, this is not always permanent. Many carriers are willing to reconsider a provider’s risk profile after a few stable years. If no new claims or issues arise, physicians can often transition back into the standard market and begin receiving preferred pricing again within 3 to 5 years.

Tip: If you’ve experienced a claim or board action, don’t assume it’s the end of the road. A knowledgeable broker can help you find short-term solutions and guide you toward long-term recovery — positioning you for a return to standard coverage as your risk profile improves.

6. Discounts and credits

Many physicians are eligible for premium discounts based on factors like part-time status, new-to-practice classification, risk management participation, and more. These credits are typically nondiscretionary — meaning that if you qualify, the carrier is required to apply them.

However, it’s up to you and your broker to ensure the insurer has all the correct information. Carriers won’t apply discounts they don’t know you qualify for. That’s why it’s important to clearly explain your work setup and keep your broker informed of any changes throughout the year. In some cases, additional savings may be available for professional affiliations, clean claims history, or procedural specifics — but only if your broker knows to ask.

Tip: Keep your broker in the loop about how your practice is structured and any updates as they happen. A good broker will proactively look for all eligible discounts — but they can only advocate for what they know.

Final thought: The importance of shopping around

Not all carriers calculate premiums the same way. Two companies could quote very different rates for the exact same provider — especially if they classify your risk differently or apply different credits. This is why it's critical to shop the market — not just at renewal, but anytime your practice evolves.

Malpractice insurance is too important to set and forget. Whether you're changing jobs, expanding your scope, or just want peace of mind, regularly reviewing your coverage ensures you're getting the right protection at the right price — without paying for more than you actually need.

Jennifer Wiggins is the CEO and Founder of Aegis Malpractice Solutions, an independent malpractice insurance brokerage that helps physicians across the country find the best coverage for their unique practice needs. She also hosts the podcast “Malpractice Insights,” offering free education and real-world guidance for health care providers navigating malpractice insurance.