Does Malpractice Insurance Cover Defense Costs?

There’s a lot of discrepancy between what’s covered under one malpractice policy and another and how much is covered in damages and costs. Below, we’ll explain some of the basics of malpractice insurance and whether it typically covers defense costs for defendants.

Malpractice Insurance Typically Pays for Defense Costs

In almost all cases, a malpractice insurance policy will cover the expenses that come from the defense of your case. Defense expenses are typically one of the core elements of malpractice insurance, as well as:

  • Attorney fees
  • Arbitration costs
  • Court costs
  • Settlement costs
  • Compensatory damages
  • Medical damages

While not every malpractice insurance policy is the same, and there can be quite a difference in what’s covered from one policy to another, defense costs are typically part of most policies.

Do Defense Costs Count Toward the Policy Limit?

Defense costs are covered in most policies, but another aspect to consider is whether that coverage is inside or outside the policy’s limits. The cost limit for a policy is a cap for how much the insurance provider will pay to resolve the claim.

Some malpractice insurance policies include the defense costs in the policy limits, while others make them separate and reserve the policy limits only for paying damages or settlements. In most cases, policy limits are for damages only, and defense costs are separate, but this is not something you should assume. Making such assumptions could dramatically affect how much you’d be responsible for personally paying in damages.

Does Malpractice Insurance Cover Punitive Damages?

Another question that many should consider is whether their malpractice policy covers punitive damages along with compensatory damages. Compensatory damages are rewarded to replace monetary losses and expenses of the plaintiff, while punitive damages are meant to penalize the defendant beyond the compensation rewarded.

But there’s a lot of variance in punitive damages coverage because there’s such a wide discrepancy in punitive damages from state to state. In some states, punitive damages are only reserved for specific situations and are capped at a certain amount, while in other states, they’re much more common. Whether malpractice insurance covers punitive damages will depend largely on local laws and restrictions.


Navigating all the ins and outs of malpractice insurance can be challenging. Baxter & Associates aims to be a malpractice insurance agency that is approachable and helpful to people who want to ensure they’re protected should they come under scrutiny. Contact our helpful staff if you want to learn more about malpractice insurance or find a policy that fits your needs.