Malpractice insurance helps therapists if a client or former client files a lawsuit against them. But there are so many options, terms, and considerations involved in getting malpractice insurance that it can be difficult to know what you need.
Without proper understanding and answers to questions like, “How much is malpractice insurance?” you can’t make an informed decision.
This post will help you understand more about malpractice insurance so you can choose the right option for your practice.
Benefits of Malpractice Insurance
Malpractice insurance addresses the unique risks medical professionals, like therapists and counselors, face. Healthcare professionals are exposed to a higher degree of liability due to the nature of their work. If they make an error, the potential harm to their clients is significant and involves their health.
This type of insurance is tailored to address these specific risks and covers claims related to medical negligence, misdiagnosis, medication mistakes, and other medical-related issues. It’s for when a patient claims a medical professional has failed to meet the standard of care expected in their professional capacity.
There are malpractice insurance options for:
- Social workers
Having this type of insurance provides benefits for mental health professionals in each of these categories.
Protection from Claims of Negligence and Malpractice
The main benefit of malpractice insurance, specifically professional liability insurance, is that it protects against claims about:
- Any instances where your advice may lead to a client’s financial loss
Even experienced therapists can make mistakes or experience unpredictable client issues. Care changes a lot between clients, so misunderstandings and disagreements can happen.
In these common situations, malpractice insurance is like a safety net. The insurance company covers the legal fees if a client sues.
Financial Protection from Legal Claims
Legal claims can ruin your reputation. But the money you might have to pay is often devastating, too. The average payout in a medical malpractice lawsuit is $257,000, but it can be much more. Without malpractice insurance, a lawsuit could bankrupt your practice.
Coverage Beyond Professional Liability
Professional liability is the basis of malpractice insurance, but there are other coverage choices, too. Counselors and therapists can also get general liability insurance. This protects against claims from third parties about bodily injury on your property or damage to their property.
General liability insurance covers:
- Legal fees
- Property repairs
- Medical costs
You may also want cyber liability insurance. Telehealth services are getting more popular, and they let you reach more clients. Many providers communicate digitally with clients or take payments online. If this is you, cyber liability insurance helps protect you if your practice experiences a cybercrime or data breach.
Legal Representation and Support
Another important benefit of malpractice insurance is the legal representation it provides. When faced with a lawsuit, even if there’s no evidence to support it, navigating that process can be overwhelming.
Defending your professional reputation takes an emotional toll. Malpractice insurance offers a lifeline of sorts in such situations by covering:
- Attorney’s fees
- Court costs
Malpractice insurance ensures you’re not left to fend for yourself if a lawsuit happens.
Coverage for a Range of Claims
The scope of malpractice insurance is quite broad and can cover a range of claims, depending on your coverage policy.
Some common claims include:
- Care-related injuries
- Medication mistakes
- Errors in treatment
Malpractice insurance can also help with unclear situations. For example, claims about HIPAA violations. You can protect yourself from common and surprising claims with thorough malpractice coverage.
Flexible Policy Types
This insurance offers flexible policy types to meet various needs.
There are two main kinds of medical malpractice insurance: claims-made and occurrence-based. For claims-made policies, the incident must happen and be reported while the policy is active.
Suppose that you have a claims-made policy but want coverage for a claim made after the policy ends. In that case, you need to invest in “tail coverage,” which extends your policy for a specified period.
Policies that are occurrence-based cover claims made during the policy period. This coverage is true no matter when someone reports the claim.
Occurrence-made policies offer protection even after you cancel the policy. This flexibility allows you to choose a policy that aligns with your risk assessment, career stage, and future plans.
Protection Beyond Your Office
Malpractice insurance mainly covers things inside your office, but the benefits go much further.
Suppose a client slipped on a wet floor in your office building and was injured. General liability insurance bundled with malpractice likely would pay their medical costs.
How Much is Malpractice Insurance?
The cost of malpractice insurance is a common concern for therapists and counselors, especially those starting their practices. There isn’t a one-size-fits-all answer to how much the insurance costs. The amount you’ll pay largely depends on your chosen policy.
Factors that influence the cost of malpractice insurance:
- Profession and Specialization – Your specialization can influence how much you pay in monthly premiums. For example, LCSW malpractice insurance costs a different amount if you work at a clinic or in alcohol and drug rehab. And, the average cost of malpractice insurance for psychologists is different than for psychiatrists.
- Location – State laws can affect how much your malpractice insurance costs. Some states have higher premiums because of laws or higher frequency of lawsuits.
- Experience – Seasoned therapists with a lengthy track record may get lower rates compared to novice counselors. Of course, a seasoned therapist with a long history of claims will typically have an increased premium.
- Coverage Limits – The coverage limits you choose will directly impact the amount you pay. Some coverage options range into the multi-millions.
- Type of Policy – The type of malpractice insurance policy you choose will influence the cost of your premium. Additionally, supplemental options like “tail coverage” can raise your premium.
Getting Quotes for Malpractice Insurance
It’s easy to search online for free malpractice insurance quotes, but often, these are preliminary quotes. Here are some tips for getting accurate malpractice insurance quotes.
Contact Professional Associations
Organizations like the American Counseling Association and the American Psychological Association have long-standing relationships with insurance carriers who can provide quotes. These organizations are a good starting point for newer therapists and counselors who are looking for a referral.
Work with an Insurance Broker
Work with a professional specializing in getting malpractice insurance coverage for mental health professionals. These brokers and agents understand the nuances of malpractice insurance. They can help you shop multiple carriers for the best coverage and rate options.
Be Prepared to Provide Details About Your Practice
When getting malpractice insurance, the insurer will want to know about:
- Your specialty (trauma therapy, family counseling, addiction counseling, etc.)
- The percentage of high-risk clients you see
- The number of clients you see
- How long you’ve been practicing
- Current history of claims
Having this information on hand will help you get the coverage you need.
Ask About Discounts
Insurance companies may give you a discount if you have more than one policy with them or if you are a member of a professional organization. See what your discount options are and how you can qualify for them.
For example, suppose that you’re an American Psychological Association member. With these organizations and others, psychologist malpractice insurance is often discounted.
Consider Your Coverage Needs
More coverage or lower deductibles increase your premium, so factor in your risk tolerance. Don’t overdo it, but don’t skimp either.
Get Quotes from Multiple Insurers
If you don’t work with an insurance agent, then make sure you get quotes from multiple insurers before deciding on a policy. Rates vary between carriers, so comparing options will help you find the best value.
Look Into Group Plans
If you work with other therapists, consider a group policy. This approach can lump you all into one insurance plan and reduce the rates for each therapist.
Review Before Signing
Never sign anything you don’t read or understand. Before committing to a policy, review exclusions, sub-limits, and the claims process.
Insurance Needs by Accreditation
Accreditation represents your commitment to established standards and practices. In many ways, accreditation is a mark of quality and expertise. If you’re accredited, note that the accrediting body may have requirements about malpractice insurance.
Different Accrediting Bodies
The mental health field is a vast landscape of diverse professionals. They range from marriage counselors to clinical psychologists. Each specialty usually has its own accrediting body.
Examples include the American Psychological Association for psychologists and the American Association for Marriage and Family Therapy for family therapists.
Each organization may have different requirements, recommendations, or mandates.
Requirements for Accreditation
Often, accreditation organizations need a minimum malpractice insurance coverage level first. This coverage ensures their members are fully protected from possible claims. Doing so protects both the organization and the members.
Depending on your accreditation, you may need to adjust your insurance coverage. For example, LPC malpractice insurance for a university counselor will be different from therapist malpractice insurance for those working with high-risk groups. These include people with personality disorders or those who are suicidal.
The coverage has to fit the specific risks.
Top Malpractice Insurance Providers
Choosing the right malpractice insurance provider is no small task. The right provider offers you financial protection and peace of mind. You can focus on caring for your patients without worrying about potential lawsuits.
Here are some of the top malpractice insurance providers.
Proliability stands out in the professional liability insurance industry because it has been delivering high-quality service since 1949. The company caters to various mental health professionals, from psychologists to art therapists.
Proliability has diverse offerings on insurance tiers, from low-cost options to high-coverage policies. They also offer special discounts to mental health professionals in certain professional associations.
HPSO, or Healthcare Providers Service Organization, has a top reputation in the industry. The organization offers complete malpractice insurance policies.
HPSO has been in business for more than 30 years. They have insured more than 96,000 therapists and counselors nationwide. They offer premium discounts and affordable policies for mental health professionals.
HPSO does not cover cybersecurity or general business liability. So, if you use telemedicine a lot, you may want to consider a different provider.
Simply Business is a digital commercial insurance broker working with several leading insurers. If you want to compare many quotes in one place, Simply Business has you covered.
Once you enter your information into their platform, they can show you quotes so you can compare and select the one that’s best for you.
But they may be unable to provide you with a quote online. In these cases, contact them directly. One of their agents can assist you so you can make the right choice.
The Trust was started in 1962 by psychologists. It offers some of the best malpractice insurance for psychologists and other mental health professionals.
The Trust provides many policy options for people in all career stages. These individuals range from graduate students to working psychologists.
There is an online application, or you can contact them by phone.
Common Mistakes to Avoid When Purchasing Insurance
As you review policies and decide which is best for you, avoid making these common mistakes
Opting for the Cheapest Option
You may have a tight budget, especially if you’re just starting out on your own or working to grow your practice. But choosing a policy only because it’s cheap is a big mistake.
The cheapest policy might feel better on your wallet, but it could leave you vulnerable to risks. That’s why it’s essential to find a balance between affordability and thorough coverage.
Not Reviewing Coverage Details
Make sure you read the policies in depth, even the fine print. It’s where you’ll find details on what’s covered and what isn’t. If you don’t review these details carefully, you could encounter some unpleasant surprises in the event of a claim.
Not Assessing Personal Risk
Every practice is unique, and so are the risks associated with it. Don’t opt for a generic policy without first considering your practice’s unique risk factors that could lead to gaps in coverage.
You might work in high-risk areas, operate in multiple states, or have a large client base. Carefully consider these factors when selecting insurance.
Ignoring Policy Limits
Every insurance policy has limits on how much the company pays for a single claim. Don’t underestimate how much settlements or lawsuits may cost. Consider potential legal fees and other related costs when deciding on policy limits.
Failing to Disclose Information
When applying for malpractice insurance, you should be open about your practice, background, and past claims. Future claims could be denied if you hide or misrepresent information when getting a policy. In the worst case, the insurer could even cancel your policy.
Insurance policies are built on trust, so insurers can cancel them at any time if they discover you were dishonest.
Neglecting Tail Coverage
Tail coverage, or extended reporting period coverage, is especially important for claims-made policies. Tail coverage protects you from claims filed after the end of your policy. Usually, these claims stem from incidents that happened while your policy was active.
Without tail coverage, you could be at risk for claims made after switching insurance providers or retiring.
Assuming Employer Coverage is Good Enough
You may be covered under your employer’s malpractice policy if you work in a group or at a treatment center.
But, relying on this policy alone can be risky. Employer policies may prioritize the business’s interests over yours.
A personal policy ensures you’re the primary beneficiary, offering better protection.
Ignoring Renewal Dates
Malpractice insurance isn’t a one-and-done affair. Policies have expiration dates, and missing these dates can leave you at risk. You must track renewal dates and understand any changes in terms. That way, you’re covered continuously.
Not Reviewing Policies Periodically
Legal parameters and personal practices are always changing in the mental health field. What was good enough coverage a few years ago may not be sufficient today. Reviewing and updating your insurance policy ensures the terms meet your current needs and standards.
Avoiding Expert Advice
Insurance, especially for special fields like mental health, can be complex. Seek advice from insurance experts rather than trying to figure it out alone. You can also ask your colleagues for insights.
Navigating the World of Malpractice Insurance
Malpractice insurance offers a multifaceted shield for mental health professionals. Insurance offers financial protection against potential claims and peace of mind so you can focus on what you do best: helping your clients.
You want to protect your growing practice. If you’re still growing your practice, All Counseling can help. We connect mental health professionals with people who need their help. Claim your profile in our therapist directory today.