In today’s high-risk healthcare environment, having medical malpractice coverage is not just a regulatory requirement—it’s a lifeline for your career. But what happens when that coverage unexpectedly ends?
Whether you’re a physician, surgeon, nurse practitioner, or allied healthcare provider, the cancellation or non-renewal of your medical malpractice insurance can leave you exposed to lawsuits, financial devastation, and loss of employment opportunities.
This blog will walk you through what to do, real-world examples, and the proactive steps you can take to stay protected.
Why Medical Malpractice Coverage Gets Cancelled or Non-Renewed?
There are several reasons why your malpractice insurance coverage may be discontinued. Understanding them is the first step toward resolving the issue.
1. Claims History
Claims Frequency refers to how often malpractice lawsuits have been filed against you in a specific timeframe. Underwriters typically raise red flags when three or more claims are made in a short period.
Claims Severity relates to how costly those claims are. Higher settlement amounts make you appear riskier to insurers, even if the claims were ultimately dismissed.
In 2023, the National Practitioner Data Bank (NPDB) recorded 11,440 medical malpractice payment reports, amounting to $4.8 billion in total settlements. This breaks down to an average payment of roughly $420,000 for each report.
When providers have multiple claims against them, it can greatly increase their risk profile, potentially resulting in the inability to renew their coverage.
2. License or Credentialing Issues
If your license has been suspended, revoked, or placed on probation, then you may lose your insurance (or have it non-renewed) as well. Insurers may classify you as high risk, even if the reasons for your suspension, revocation, or probation are simply personal, such as mental health or recovery from substance abuse.
Example: A nurse practitioner in California had a brief license suspension due to a documentation error. Despite reinstatement, her insurance provider cancelled her medical malpractice insurance mid-term.
Tip: Keep detailed documentation and proof of remediation (e.g., board letters, treatment program completion) and share them openly with your insurer.
3. Non-Payment of Premiums
An all-too-common reason for policy cancellation that could be avoided is a late premium payment. Most policies include a brief grace period, but the insurer is not required to offer one.
4. Change in Scope of Practice
Expanding into cosmetic procedures or pain management, for instance, without informing your insurer may violate policy terms.
Example: A general surgeon recently added bariatric procedures to his practice, assuming they were covered under his existing policy. They weren’t—and only after a review did he realize the oversight, requiring a new policy.
Similarly, primary care physicians who begin offering aesthetic treatments (like Botox or dermal fillers) may find these excluded from their base policy.
5. Carrier Withdrawal or Market Conditions
At times, it simply is not about you. Adjustments in the market can cause insurance providers to completely withdraw from specific territories, change their underwriting criteria, or stop offering coverage for certain services.
For example, several regional insurers withdrew from OB-GYN malpractice coverage in New York and Illinois due to those states’ reputations for litigation. As a result, OB providers struggled to find new policies.
What to Do If Your Malpractice Insurance Is Cancelled or Not Renewed?
Step 1: Review the Notice Carefully
Read the non-renewal or cancellation notice in detail. It should specify:
- The effective date
- The reason for termination
- Whether it’s a non-renewal (at the end of the term) or a mid-term cancellation.
Time-sensitive Tip: You typically have 30–60 days to secure alternate coverage before your current policy ends.
Step 2: Contact a Specialized Broker Immediately
Insurance agents specializing in medical malpractice policies can be lifesavers. They:
- Understand underwriting trends
- Have access to multiple underwriters, including high-risk
- Can help to expedite applications
Tip: If you had incidental medical malpractice coverage through a general liability or business owner’s policy, your insurance agent can help you figure out if you now require a standalone medical malpractice policy to have full coverage.
Step 3: Be Honest About Your Risk Profile
Disclose any disciplinary actions, scope changes, or pending claims. Insurers conduct background checks via the National Practitioner Data Bank (NPDB), state medical boards, and claims history databases.
What to Prepare:
- Claims history (5–10 years)
- CME documentation or risk management courses
- Updated CV or resume
- Explanation of any past issues
Step 4: Get Tail Coverage if You Had a Claims-Made Policy
If your policy was claims-made, you will need tail coverage (extended reporting endorsement) to cover any claims in the future for incidents that occurred during your old policy term.
Example: A psychiatrist in Georgia was sued a year after retiring. If she had not had tail coverage, she would have incurred all her legal fees and potential payout on pocket—which was nearly $150,000.
Step 5: Apply for New Coverage Immediately
Don’t let any lapse in malpractice coverage, not even for a day, as this will expose you to potential financial and professional ruin. For the best chances of getting a new policy, apply to a new carrier within the 30–60 day window following a notice of cancellation.
When applying:
- Check State-Specific Regulations: The malpractice insurance requirement varies by state. Florida and New York require certain providers to carry malpractice insurance, while California does not mandate it in most cases. Be sure to determine your state’s requirements through your state medical board or the Federation of State Medical Boards.
- Compare policies across multiple insurers
- Pay attention to exclusions, limits, and consent-to-settle clauses
- Ask whether the policy covers telemedicine, urgent care, or other areas you plan to practice
Prevention Tips: How to Avoid Future Coverage Issues
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Stay Current on Licenses & Certifications
Keep your state license, DEA registration, and board certifications in good standing, and keep current Continuing Medical Education (CME) credits up to date to avoid red flags.
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Verify Coverage for New Procedures:
Before offering any new services—like cosmetic treatments, telehealth, or pain management—confirm that they’re covered under your current policy. Adding a new procedure without disclosure can create a gap in coverage, even if your license permits it.
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Take Risk Management Training
Many insurers offer leniency on claims or reduced premiums if you complete approved risk mitigation courses. These courses can also help lower your risk of future claims.
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Work With Long-Term Partners
Pick insurance brokers and companies that have helped healthcare practitioners in the past and have provided assistance in renewal claim negotiations or claims disputes.
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Audit Your Practice
Conduct periodic audits to assess whether your clinical practices, documentation protocols, and risk management strategies align with your malpractice coverage. This helps identify any blind spots that could lead to claims or denied coverage.
Having your malpractice insurance dropped can definitely be concerning, but it doesn’t mean you have to stop practicing. If you’re dealing with the cancellation or non-renewal of your malpractice insurance, it’s crucial to understand the situation and act quickly.
By collaborating with an experienced broker, familiarizing yourself with the different types of medical malpractice insurance, and staying alert to any changes in your practice, you can secure the coverage you need and stay on track with your career.
