Then why in every state that has enacted some form of tort reform did the average premium go down over 30%? Insurance companies know that it limits the liability and therefore factored into the cost. That means 1/3 or more of your insurance cost goes to protecting against these frivolous lawsuits or over reaching awards. Malpractice insurance also went down by quite a bit more, which allowed more doctors to make more money or move into those states knowing they could actually make money and repay for the costs of education, offices , and staff.