66% of telemedicine malpractice claims are misdiagnosis, but standard malpractice policies exclude technical failures that cause them

An analysis by a U.S.-based professional liability provider found that 66% of telemedicine-related malpractice claims filed between 2014 and 2018 were related to misdiagnosis. This is significantly higher than the misdiagnosis rate in in-person malpractice claims, and the gap makes sense: telemedicine removes the physician's ability to palpate, auscultate, and observe subtle physical signs. But here is the compounding problem -- when a misdiagnosis occurs because a video feed froze during a critical moment, because image quality was too low to distinguish a benign lesion from melanoma, or because audio dropped out and the patient's description of chest pain was incomplete, standard medical malpractice policies often do not cover the claim. The technical failure component creates an exclusion gap that leaves both the physician and the patient without recourse. The financial exposure is substantial and growing. In 2024, the top 50 medical malpractice verdicts averaged $56 million -- more than double the $27 million average in 2019. Most physicians now face malpractice premium increases of 10-25% annually. For telemedicine providers, the insurance landscape is even more hostile: they need both a traditional malpractice policy and a separate virtual care / technology liability policy to be fully covered, but many are unaware of this gap until a claim is filed. Smaller or regionally focused insurers are exiting the malpractice space entirely due to rising losses, leading to premium volatility and market constriction that disproportionately affects solo practitioners and small telehealth practices. The structural reason this gap persists is that medical malpractice insurance was designed for a world where the physician controlled the care delivery environment. In a clinic, if the equipment fails, the physician can switch to a manual instrument. In telemedicine, the delivery platform is a third party, the patient's internet connection is outside anyone's control, and the failure mode is fundamentally different. Insurance products have not evolved to match this reality, partly because the actuarial data on telemedicine-specific risks is still thin, and partly because insurers have no incentive to expand coverage scope when they can instead add exclusions.