A Guide to Malpractice Insurance for NPs
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“There’s a misperception that malpractice insurance is cost-prohibitive. But when you consider the cost of an average policy against the average cost of defending one of these suits, it might be a good investment.”
Jennifer Flynn, CPHRM
Nurse practitioners (NPs) are in the profession of looking after others, but they still need someone to look after them.
Malpractice insurance, also known as professional liability insurance, does just that: it protects NPs from the costs associated with claims of negligence or incompetence, including costs related to liability and legal defense. As the role and responsibility of NPs continue to increase, it’s essential that NPs be adequately covered.
Malpractice insurance for NPs is so important, but it’s also often misunderstood. Finding the right coverage plan requires an NP to consider several factors: state regulations and practice environment; different types of malpractice insurance (claims-made versus occurrence-based); and whether to negotiate an employer-provided policy or sign onto an independent one.
Read on to learn more about the importance of malpractice insurance for NPs, including which details to look for when selecting coverage.
Meet the Experts
Jennifer Flynn, CPHRM
Jennifer Flynn is vice president of risk management for the Nurses Service Organization within the Healthcare Division of Aon’s Affinity Insurance Services, Inc. With more than 24 years of experience in healthcare insurance, she specializes in educating nurses and healthcare professionals on professional liability risks and developing strategies to promote patient safety and quality management.
A certified professional in healthcare risk management and a licensed property & casualty agent, Flynn is a frequent national speaker and published author on healthcare risk and liability topics. She holds a BA in psychology from Arcadia University in Glenside, Pennsylvania.
Flynn was interviewed for an update to this feature in 2025.
Cathy A. Klein, JD
Cathy Klein is a lawyer, educator, and nurse practitioner. She graduated from the University of Denver College of Law, the University of Colorado Master’s Nursing Program, and the Florida International University School of Education.
Klein started one of the nation’s first advanced nurse practitioner programs that prepared RNs to practice as pediatric NPs, and she later taught RNs to practice as advanced adult nurse practitioners. Klein was also legal issue editor for a leading professional nursing journal for 25 years. As an attorney, Klein was named Mediator of the Year for Jefferson County in Colorado and listed in The Wall Street Journal as a Businessman of the Year.
Klein was interviewed in 2021.
The Importance of Malpractice Insurance for NPs
“Most states require NPs to have malpractice insurance,” Klein says. “You can either have your own, or you can rely on your employer’s, or you can go without. But I would never recommend going without, under any conditions.”
While it’s commonly referred to as malpractice insurance, the alternative term of professional liability insurance may be more accurate, Klein says. The most frequent claims made against NPs involve a failure to diagnose or a delay in diagnosis, and even if an NP has done nothing wrong, they may still face accusations (or claims) of misconduct. As a result, those claims will need to be defended.
And the chances of being targeted by such a claim will continue to increase as NPs play a more prominent role in the US healthcare system, where they often act as primary care providers with prescriptive authority.
“In my experiences with the Colorado Board of Nursing, they come down a lot harder on NPs than RNs, because NPs have more responsibility, and therefore can do more damage,” Klein says.
A small complaint can quickly snowball into significant disciplinary and legal action. Without comprehensive malpractice insurance, an NP will find themselves far out of their depth in attempting to defend themselves. The costs can be significant, whether the case is in front of a board of nursing or in the court system.
“To mount a defense on a healthcare provider liability case, I’d say you’re looking at $100,000 to $200,000 in legal fees and expert witness fees,” Klein says. “Chances are you don’t want to pay that out of your own pocket. NPs must have their own malpractice or liability insurance, beyond what an employer may offer, and particularly with coverage for license defense.”
Different Types of Malpractice Insurance for NPs
The most important distinction in malpractice insurance policies for NPs is between claims-made policies and occurrence-based policies:
- Claims-made policies only offer coverage for incidents that are reported or that occur while you have that particular insurance policy.
- Occurrence-based policies cover an NP when a claim is filed when the policy is active, regardless of when the incident happened.
Both have trade-offs.
Most employers offer claims-made insurance policies to their NPs, which means a change in employment status could result in a loss of coverage. Therefore, NPs negotiating employer-provided malpractice insurance policies are encouraged to “buy the tail”—a term that means extending the coverage period of a policy so that it can include claims made after they leave their current position.
“When you buy the tail, that brings your coverage through however many years you buy the tail for,” Klein says. “You need to buy it for at least the statute of limitations in your state. It’s absolutely critical if you want to sleep at night.”
Employer-Provided vs. Personal Malpractice Insurance for NPs
Most employers offer NPs a basic form of malpractice insurance, and most NPs accept it. But there’s more to consider.
Employer-provided malpractice insurance rarely covers disciplinary actions; NPs are advised to carry their own independent policy, which covers this area. In addition, employer-provided policies may not cover lost wages, off-duty incidents, or attorney fees related to a lawsuit or license board hearing. And if an NP is covered by employer-provided malpractice insurance, then the employer and insurer can decide to settle a case for the NP, even if the NP wishes to litigate.
“You must have your own policy,” Klein says. “Do not rely on your employer’s policy. You have got to have someone who cares about you, and nobody else.”
NPs who seek out their own personal malpractice insurance can ensure that they have high policy limits, wide coverage, and a personal advocate against any liability claim. Personal malpractice insurance also allows NPs to tailor their level of coverage to their individual needs.
Suppose an NP considers picking up extra work outside their current employer’s network or even performing volunteer work. In that case, additional coverage beyond that of their employer is essential.
Managing Risk with Malpractice Insurance for NPs
According to the nation’s largest provider of nursing liability insurance, the Nurses Services Organization (NSO), an NP’s specialty and work environment can affect their overall likelihood of being the target of legal action.
Over 80 percent of all claims occur within four specialties: primary care, family practice, behavioral health, and gerontology. Regarding the work environment, over 65 percent of all claims occur in private physician practices, private NP practices, and aging services facilities; hospitals and emergency departments see significantly lower claims.
NPs can take specific steps to reduce risk and protect themselves from liability claims regardless of specialty or practice environment. Documentation of patient interactions is critical, as is strict adherence to one’s scope of practice. In addition, NPs will need to know their state’s laws, understand their employer’s policies, and, most importantly, know that they have comprehensive malpractice insurance coverage.
“I have represented NPs who did not have enough insurance, or who were only covered by their employer, and who got in trouble with the board of nursing, and found themselves in a big heap of a mess,” Klein says. “If they had their own malpractice insurance, they wouldn’t be in a heap of a mess. Yes, you need malpractice insurance. That is non-negotiable.”
Update 2025: More Power, More Responsibility
In 2025, nurse practitioners are seeing more patients and performing more complex treatments than ever before. Malpractice insurance remains crucial. If at any point a patient is injured by an NP’s actions, or an NP’s failure to act, and that patient then chooses to bring a liability lawsuit, an NP will want to be covered for defense against those allegations. It’s not just the harrowing legal process they want to be protected from, either: an NP’s assets and reputation may also be on the line.
“Many of our customers tell us peace of mind is their number one reason for having malpractice insurance,” Flynn says. “If their employer-provided coverage only provides them with coverage during working hours, they still want to be covered for things that they do outside of their employment, such as independent contracting, volunteering, teaching, and the like.”
Over the last few years, an increasing number of states have given nurse practitioners full practice authority, allowing them to practice to the full scope of their education and training. That means an increase in the range of care being provided to patients, and thus a widening window for malpractice allegations. But even in states without full-practice authority, NPs maintain great power in prescriptive and diagnostic authority. That power comes with responsibility.
“We’re seeing an increase in the payouts awarded in settlements or judgments of claims. Right now, our average is over $332,000, which we’re paying to manage, defend, and resolve a claim against an NP in our NSO program. When you look at that versus the relative annual cost for a policy, it might be a good investment for NPs.”
Employer-provided malpractice insurance does not cover everything. NPs can still find themselves the subject of an allegation from a period that occurred with a previous employer. And any complaint made to the State Board of Nursing can force an institutional review that may result in enacting sanctions against an NP’s license. Coverage extensions help fill the gaps that some employer-provided malpractice insurance may have.
“At NSO, we are dedicated to providing not just insurance but risk education that goes along with it,” Flynn says. “When we look through claim files, we try and educate our policyholders on what kind of trends we’re seeing in malpractice: what claims we’re seeing the most, and what the financial impact of those claims is.”
The NSO’s 5th edition of the “Nurse Practitioner Professional Liability Exposure Claim Report,” which includes data up to 2022, is an insightful snapshot of the liability landscape for NPs. It found that the cost of defending allegations in license protection matters had gone up 19.5 percent since 2017, and 61.1 percent since 2012; approximately 43 percent of license board matters led to some type of board action against an NP’s license. The number one malpractice allegation against NPs was failure to diagnose and delay in diagnosis, while the second and third largest categories were treatment and care, and medication management.
“We always say that as you’re starting your career, it’s important to implement some key risk control habits in your daily practice,” Flynn says. “It’s knowing and complying with your state’s scope of practice requirements. It’s following documentation standards that are widely accepted by the profession. It’s maintaining clinical competencies, having great rapport with your patients, and being proactive with managing expectations with those patients. It’s having good professional written and spoken communication skills.”
If asked to highlight one specific area of risk control, Flynn would point NPs to the importance of good documentation. The health record is a legal document: one that will be scrutinized in the event of a liability lawsuit. In the era of the electronic health record (EHR), where everything is logged and timestamped, proper documentation is critical in demonstrating that an NP is meeting the standard of care. Good documentation can be a prophylactic against miscommunication and misunderstanding.
But there’s a misperception that an NP is either liable or not, when in reality, there are shades of gray. And that’s where the right insurance can make all the difference.
“There’s a misperception that malpractice insurance is cost-prohibitive,” Flynn says. “But when you consider the cost of an average policy against the average cost of defending one of these suits, it might be a good investment.”
Matt Zbrog
WriterMatt Zbrog is a writer and researcher from Southern California, and he believes nurse practitioners (NP) are an indispensable component of America’s current and future healthcare workforce. Since 2018, he’s written extensively about the work and advocacy of NPs, with a particular focus on the rapid growth of specialization programs, residencies, fellowships, and professional organizations. As part of an ongoing series on state practice authority, he’s worked with NP leaders, educators, and advocates from across the country to elevate policy discussions that empower NPs. His articles have featured interviews with the leadership of the American Association of Nurse Practitioners (AANP), the National Association of Pediatric Nurse Practitioners (NAPNAP), and many other professional nursing associations.