Neurologists face potential liability in their practice and should always maintain adequate neurologist malpractice insurance coverage. While their risk exposure is lower than that of neurosurgeons or obstetricians, they still require protection against claims. As a result, neurologist malpractice insurance premiums tend to be lower, reflecting the reduced risk and smaller coverage amounts. However, these insurance costs remain an important factor influencing a neurologist’s overall take-home pay.
These costs make understanding neurologist malpractice insurance essential for long-term financial planning.
Key Takeaways
- Malpractice insurance costs are unavoidable for neurologists and are determined by the state in which they practice medicine, their practice setting, and their claims history.
- On average, neurologists pay between $8,500 and $20,000 in annual malpractice insurance premiums.
- Malpractice insurance costs are necessary but can erode a neurologist’s take-home pay.
- Preparing in advance can help physicians reduce the impact of neurologist malpractice insurance on their financial plans.
- Neurologists have lower frequency in claims but higher indemnity payments compared to other specialties.
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Average Neurologist Malpractice Insurance Costs
According to Gallagher’s medical malpractice insurance marketplace data, in New York, the average filed rate is $27,382, and the independent broker MEDPLI provides similar figures with premium estimates of $20,000 in Birmingham, AL, $40,000 in Chicago, IL, and $20,000 in Houston, TX for this same policy limit. However, in states with stronger tort reform and lower risk, including certain regions in Texas, for instance, the average rates tend to be lower than what is seen in New York or Illinois. These figures highlight how neurologist malpractice insurance rates can vary significantly depending on state regulations and risk levels.
Neurologist malpractice insurance represents a smaller percentage of income than in higher-risk surgical specialties. For a neurologist, with an average salary of about $332,000 per year, malpractice insurance costs have the potential to lower a neurologist’s take-home pay by 3–6 percent each year. For physicians comparing coverage options, evaluating different neurologist malpractice insurance carriers can lead to meaningful savings.
Neurologist Malpractice Insurance and Take-Home Pay
The cost of malpractice insurance is only one piece of the salary. For most physicians, it will include a combination of taxes, benefits, retirement, student loans, and malpractice insurance. For early-career physicians, the cost of malpractice insurance will likely have a more considerable impact. Understanding the full impact of neurologist malpractice insurance on salary helps physicians plan more effectively for taxes, benefits, and savings. The challenge is that it adds another layer to a salary that is often stretched by the combination of taxes and other obligations.
This cost is very significant over time. Over the course of a 20-year career, this can easily become a few hundred thousand dollars. This is a financial obligation without proper planning that can become a significant roadblock to wealth creation and even delay retirement.
Claims-Made vs. Occurrence Policies
When selecting a neurologist malpractice insurance policy, physicians will often choose between claims-made and occurrence coverage. As noted, the difference is that the coverage for the policy is dependent on when the alleged negligence took place (occurrence) or when the claim is filed (claims-made). For a claims-made policy, you will typically need to purchase “tail coverage” if you want to leave a practice or retire.
Tail coverage typically costs between 150–200 percent of the final year’s premium. An occurrence policy is typically more expensive but is not dependent on the tail coverage. Choosing the right neurologist malpractice insurance structure can prevent large, unexpected expenses later in a neurologist’s career.
Planning Ahead
Planning ahead of time is one of the best ways to reduce the risk and cost associated with malpractice insurance. One way to do that is with a contract. When reviewing employment contracts, make sure to clarify who pays for neurologist malpractice insurance, the employer, the group, or the individual physician. Contracts may state that the employer is covering all or a portion of the premiums, or it may state that it is covered in a group policy.
Institutions with groups of physicians often have the ability to negotiate group rates or offer staff providers discounted malpractice insurance rates as part of their employment contract, while an independent contractor may need to evaluate different carriers and different policy types to choose the best value.
Planning in advance also means that a neurologist can add malpractice insurance costs as part of their budget. They can ensure they have the coverage they need and that their coverage limits are high enough to avoid self-insuring in the event of a claim.
While some neurologists may just accept a policy from their employer, many neurologists can benefit from shopping their policies periodically to ensure they have the lowest rate. Physicians can also work with a broker who can assist them with negotiating malpractice insurance costs.
Planning Beyond Malpractice Insurance
Neurologist malpractice insurance is a necessary evil and reducing the out-of-pocket premiums is a great start, but there are many other aspects of wealth building and financial planning a neurologist should be concerned about and take action. Preparing for and budgeting for malpractice insurance costs is just one more step a neurologist can take to reduce the financial burden they experience.
Maximizing disability and life insurance benefits, saving for retirement with tax-advantaged investment vehicles, and investing conservatively and with a diversified portfolio are just a few strategies a neurologist should implement. By reducing their overall expenses through proper financial planning, a neurologist can begin to protect their take-home pay from the increasing cost of malpractice insurance.
Planning Against Malpractice Costs
Malpractice insurance is an unfortunate and necessary expense for most neurologists. By understanding the regional premium differences, the differences in policy types, and strategies for negotiating those costs, neurologists can take control of their finances rather than let them control them.
Physician’s Thrive works with neurologists on selecting the right malpractice insurance policy, negotiating contracts, and proactively planning for their overall financial situation. If you are a neurologist interested in learning more about how malpractice insurance costs will affect your take-home pay or how you can manage them to ensure your financial security, contact us today for a free consultation.
