Every state in the US has its own insurance laws. Maryland, in particular, requires each insurance company that they license to carry malpractice insurance in order to protect the welfare of the citizens. The average person will associate malpractice insurance with doctors and the medical field and only with that. However, this is simply not the case. Any company or individual that is licensed as a business can be sued for malpractice. Every once in a while, we all make mistakes, and malpractice insurance ensures that we are protected from them. Consumers, especially, are protected from financial or physical harm from inappropriate services or care.For example, let us examine a married couple under the age of forty. In seeking out a health insurance policy, a responsible agent will offer the option of maternity coverage. The pair may or may not choose to pay for this maternity coverage, but it would be seen as malpractice if the insurance agent did not address the matter. If the salesman had sold them a policy without mentioning the lack of maternity benefits, the couple could have a baby later on, assuming that their child would be covered. The company and agent could be sued for malpractice because they did not inform the couple of future enrollments in their policy, because of the age of the couple. Therefore, all insurance companies in Maryland must be licensed with malpractice insurance themselves.
Homeowner’s insurance would be another key example. If a company sells an insurance policy to someone who lives in a known legal flood zone, but does not include flood insurance on the policy, bad things could happen. Unless the agent discussed and addressed the flood zone with the homeowner, and the homeowner declined to buy the coverage, the company can be taken to court for malpractice. However, if the company has proof that the homeowner declined (a signature, a witness), then they are safe from malpractice. A responsible company would not issue an insurance policy to a homeowner who lived in such an area without covering them for flood damages. In the case of getting a mortgage, the issuing company would require the homeowner to produce the flood insurance before carrying out the approval of the mortgage.
No matter what type of insurance company it is, the state of Maryland requires that they have malpractice coverage. This will pay for any and all lawsuits the company is charged with for malpractice. Because these rulings often deal with large sums of money, the state can not allow the company to provide insurance for itself.
Although there is much more that comes into play in the practical application of the law, the principles remain the same. Each case has many aspects that come into play. Many lawsuits boil down to a case of “he said, she said,” and can become quite hairy. Because insurance companies have to carry malpractice insurance, the price of insurance in general skyrockets, but it ends in general protection for the greater good.
