Limits of liability and Texas tort reform

For physicians who are new to Texas, choosing the right amount of medical malpractice coverage is crucial for protecting your practice. This guide explains how Texas tort reform can affect coverage decisions and what factors to consider when selecting liability limits. 

Medical malpractice insurance protects you against lawsuits associated with treating patients by covering legal expenses and settlement costs. Several factors determine how much this type of insurance costs. Typically, premiums are set based on your practice location and your specialty. Your premium is also affected by the procedures you perform; the limits of liability you request; how long you’ve been in practice; and your claims experience. 

Of these rating factors, the factor that physicians have the most control over is limits of liability. The amount of insurance you carry — your limits — helps determine how much you pay.

Limits of coverage

Limits spell out the maximum amount your policy will pay. Medical malpractice limits can range from $100,000 per claim/$300,000 per policy period to $1 million per claim/$3 million per policy period, and your premium will vary based on the limits you request. 

When determining what limits to carry, physicians typically speak with colleagues who practice in their specialty and location to see what limits of liability they carry. Personal financial advisors or insurance agents can also recommend limits. Physicians should also consider any contractual obligations when deciding on limits of liability.

Another factor to consider when it comes to limits — Texas passed medical liability reforms in 2003, reforms that include a $250,000 cap on non-economic damages for physicians. This damage cap applies only to non-economic damages (pain and suffering, emotional impairment, mental anguish, and loss of companionship.)

Economic damages — including hospital bills, lost wages, lost earning capacity, damages that are more easily assigned a monetary value — are not restricted. So, physicians also need to consider the potential for economic damages when deciding on limits of liability and how much coverage they need.

To learn more about the coverage types and limits offered by TMLT, please Request a Quote or visit our Buying Insurance resources.