Professional Liability Insurance for Nurses: Why EVERY Nurse Must Have It

Professional Liability Insurance: Why EVERY Nurse Must Have It

You worked hard to earn your nursing degree. Then you studied to pass NCLEX. Now, you’re a licensed nurse, ready to start the most respected profession. Your professional license should be insured, the same as your health, house, or car. It represents your livelihood, as well as the investment you made to become a nurse. For about $2.00 a week, you can protect your career… and your future.

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Common mistakes new nurses make

No matter how skilled or experienced you are, you’re human… and humans make errors. The most common mistakes made by new nurses are:

1. Medication mistakes: Hospitalized clients can receive about 20 medications a day. Even following the Five Rights of Medication Administration, there is no guarantee that you will never make a mistake. Administration errors account for over 30% of medication mistakes; a study showed that 64.55% of nurses reported giving the wrong medication and another 31.37% reported a “near miss.”
2. Infection transmission: Every year, hospital infections account for 99,000 deaths in the United States. According to the CDC, 1 in every 31 clients will get a hospital-acquired infection (HAI). With the COVID-19 pandemic, both professionals and the public have heightened awareness of how disease is spread, and the need to be vigilant. Following standard precautions, including proper hand hygiene, cannot be over-emphasized.
3. Documentation errors: It’s probably not until you’re in a work setting that you realize how much documentation must be completed — and how important it is. Besides routine notes on client status, orders, and medications, you are also responsible for charting efforts to advocate for clients, by pursuing your concerns and engaging the chain-of-command.
4. Accidents involving falls: JCAHO stresses the need to prevent falls in hospitalized clients; 30-50% of those who fall will sustain an injury. About 79% of falls occur when clients are unassisted; 85% of falls happen in the client’s room. As their nurse, you are responsible for assessing — and preventing — falls.

7 myths about why you don’t need professional liability insurance

During your nursing education, your school may have provided some limited liability coverage. You may also have thought that your clinical actions were covered under your instructor’s nursing license; however, the only person who can work under a license is the one named on the license.

EVERY nurse — from nursing school onward — needs individual professional liability insurance. According to medical liability insurance providers, NSO and CNA, the average nurse’s malpractice claim is $164,586. (NOTE: Nurse Plus Academy does not endorse or receive compensation from any specific professional liability insurance provider.)

Unfortunately, misconceptions persist about why it’s unnecessary to purchase professional liability insurance. Let’s look at these myths — and the realities:

MYTH #1: I don’t need my own professional liability policy, because my employer covers me.

REALITY: All insurance policies only cover the person or organization named. Your employer’s policy is meant to protect your employer, not individual nurses. And any coverage will have financial limits. If you are named in a case, the employer’s policy is limited to malpractice, not to your licensure. An attorney is appointed, without your input; that attorney’s loyalty will be to the employer, not you. Finally, any coverage is limited to the duration of your employment. If you leave the job, and the lawsuit is filed the next day, you will have no coverage.

MYTH #2: Only physicians get sued for malpractice or negligence, so it’s a waste of money.

REALITY: While physicians do get sued more frequently for malpractice (In 2020, about 52% of nationwide cases against physicians were for malpractice; 48% were for adverse actions.), a lawsuit for adverse action can be much more destructive to a nurse’s career and livelihood. In 2020, only 2% of cases against nurses were for malpractice; 98% were for adverse actions, mostly actions that could affect licensure. Adverse action lawsuits require an attorney, court costs, and can sometimes result in a suspension, surrender, or revocation of your nursing license.

MYTH #3: My professional license is a legal right.

REALITY: Unlike a constitutionally protected right, having a professional license is a revocable privilege. A privilege does grant due process, but your license must be properly maintained. If you are sued, and cannot prove your case, your state licensing agency (usually State Board of Nursing) can institute disciplinary measures. The Board of Nursing retains jurisdiction for your license, even if the registration has lapsed. Any legal action requires the skill of an attorney, and the cost of retaining/regaining your license can be incredibly expensive without professional liability coverage.

MYTH #4: I won’t be sued if I’m a “good nurse.”

REALITY: No matter how you try, or how long you practice, perfection as a nurse is impossible. At some point, every nurse will make a mistake; thankfully, most cause no harm. If you are ever named in a medical lawsuit, you are required to defend yourself against the allegations, even if they are false or have no merit. This means hiring legal defense to represent you. Without professional liability insurance, you face overwhelming expenses that must be paid. The average attorney fees to defend a malpractice claim for a nurse is $37,084.

MYTH #5: Having malpractice insurance makes me a target for lawsuits.

REALITY: Nothing is known about your professional liability coverage until after the lawsuit is filed and the discovery process begins. Juries never know if you have coverage; they only determine if there was a departure from standard practice, and if so, did that departure cause the client’s injury. Also, being uninsured will never prevent you from being named in a lawsuit, even if you’re only wanted for a deposition. You still must respond and pay for legal representation.

MYTH #6: I don’t have any assets, so they can’t get anything, even if I am sued.

REALITY: Even if you don’t have anything of value that could be awarded, if a jury verdict indicates malpractice, negligence, or an adverse action, a court order will be placed against you. The result is an “unsatisfied judgment,” with liens, seized assets, garnished wages, and a destroyed credit rating. Possibly even worse, you face licensure discipline by your Board of Nursing, for poor moral character. At the end of the day, this is more damaging than bankruptcy.

MYTH #7: I work in a government/charitable organization/volunteer position, so I’m immune from lawsuits.

REALITY: Having a job that is deemed “immune” does not prevent you from being named in a lawsuit. And you have NO immunity from licensure discipline from your Board of Nursing. The definition of immunity has been narrowly interpreted, and sometimes abolished. Plus, you’re still responsible for legal expenses to get your case dismissed on grounds of immunity.

More about malpractice

You may already be familiar with malpractice and its six elements:

1. Duty. Duty must be established first before the malpractice claim can proceed. The nurse must have a special relationship with the client that included providing care, while adhering to an acceptable standard of care.
2. Breach of duty. The expected standard of care for the specific situation was not followed by the nurse.
3. Foreseeability. A link must exist between the nurse’s action and the injury that was sustained.
4. Causation. There must be proof that the harm or injury that occurred was a direct result of the nurse’s failure to follow the expected standard of care.
5. Harm or injury. The client must provide evidence of the type of harm or injury: physical, emotional, or financial.
6. Damages. The nurse is judged to be responsible for the harm or injury that occurred and now must be compensated.

The most frequent malpractice claim against nurses is alleged patient death. Claims that result in the need for long-term care, including neurological damage or spinal injuries, lead to the most expensive settlements.

Licensure discipline can be more costly than malpractice

Licensure discipline is administered by each state Board of Nursing (BON). According to Edith Brous, RN, BSN, MS, MPH, JD, a nurse attorney, of the 12,620 U.S. lawsuits against nurses in 2020, 12,398 were for adverse action, mostly involving licensure. The most common reasons for a BON to investigate or discipline a nurse are:

• Controlled substance management or diversion
• Substance abuse or impairment
• Fitness to practice
• Documentation deficiencies
• Falsification of medical or business records
• Pre-charting

Every state BON can discipline a nurse for unsafe practice. Unsafe practice covers a wide spectrum, with each action being a possible cause for legal consequence and the need for an attorney. Examples include:

• Medication errors, including actions such as failing to scan (or not documenting when scanning is not possible)
• Clinical errors
• Failure to initiate CPR
• Falling asleep while on duty
• Failure to recognize and report clinical concerns
• HIPAA privacy violations
• Violating employer policies

Your state’s BON can also initiate disciplinary measures for reasons that aren’t related to your employment:

• Any dishonesty in the application or re-registration process
• Fraud or misrepresentation
• Failure to respond to BON communication
• Failure to notify the BON of name or address changes

Here’s what is commonly covered by a policy

If you’re convinced that protecting your license is worth the cost of a single nursing textbook, take time to find the best company for your needs. Here’s what to look for when choosing a policy:

• Professional Liability Coverage:
  • Up to $1,000,000 for each claim that you are found to be legally obligated to pay as a result of a professional liability claim arising from a covered medical incident.
  • Up to $3,000,000 (or $6,000,000, depending on the policy) annual aggregate, for all covered claims in the policy period.
• Defendant Expense Benefit: Up to $1,000 per day and up to $25,000 annual aggregate.
  • Includes lost wages and covered expenses when you attend a required trial or proceeding as a defendant.
• Deposition Representation: Up to $10,000 annual aggregate to pay for an attorney as a result of your required appearance at a deposition that results from professional services.
• Defense Attorney: An attorney to represent you when necessary. Win or lose, legal fees will be paid for covered claims, in addition to your liability limit. If possible, seek counsel from a nurse attorney.
• Assault Coverage: If you are the victim of a violent action at work, or on your way to/from work, you will be reimbursed for medical expenses, including workplace violence counseling, as well as damage to your property.
• Personal Injury Coverage: You are covered, up to the acceptable limits of liability, against covered claims arising from allegations of slander, libel, assault and battery, and other alleged personal injuries that arise during performance of your professional services.
• Damage to Property of Others: If you are at a patient’s or client’s home and accidentally break something, the policy covers unintentional damage you cause to someone else’s property while at your personal residence or workplace.
• First Aid Expenses: You can be reimbursed for expenses you occur while rendering first aid to another person. This includes supplies from a personal first aid kit that you might use to assist a victim of a traumatic accident.
• Sexual Misconduct or Abuse: If you are obligated to pay as a result of covered claims involving acts of sexual misconduct related to professional services, the policy insures you up to the applicable limit of liability.
• Information Privacy Coverage (HIPAA): Should you violate HIPAA laws, you are legally obligated to pay for notification of patients of the violation of their confidential personal information. You may also be subject to fines and penalties.
• 24/7 Coverage: You are covered for incidents that happen on the job and after hours, as well. You should also be covered if you change jobs or during the event of unemployment.

How much will it cost?

Nursing students: About $35 per year, with coverage of all the important features listed above. When you graduate, you can easily update and continue the policy.

New Graduates (less than one year): About $50. After one year, the cost increases.

Licensed Practical/Vocational Nurse: About $110 per year for full-time employment.

Registered Nurse: About $110 per year for a nurse who is employed full-time.

When you measure the annual expense of a policy against potential expenses of a lawsuit, it’s obvious that professional liability insurance is worth it. Even a frivolous claim against you can take years and cost hundreds of thousands of dollars.

Never stop learning … or protecting your license

Graduation from nursing school is just the beginning of your education. You’ve chosen a career that is constantly changing and evolving. As you face new standards of practice and technology, be sure to maintain your professional liability insurance policy. No matter what happens, you will be protected.

About the Author

Winona Suzanne Ball

Nursing Adviser, RN | MHS, Governors State University, IL
Full member of the American Nurses Association. Learn more