Benefits of Therapist Liability Insurance

Working as a therapist is an incredibly rewarding job, but having a career in mental health poses certain risks that make therapist insurance a necessity. While the highly personal, emotionally-charged nature of the mental health industry is what makes therapy successful, being involved in a subjective business means there’s a lot of gray area for potential claims to be filed.

Therapist liability insurance is typically made up of three policies: 

• Professional Liability insurance for therapists
• General Liability, also called commercial liability or business insurance
• Cyber Liability insurance

Whether your employer provides insurance coverage for you, you’re a self-employed therapist, or work in private practice, having individual insurance is extremely beneficial.

Importance of Individual Coverage

Therapist liability insurance may not feel like a major concern if your employer offers coverage, but the possibility of paying your own legal fees out-of-pocket still exists. Even if you’re self-employed, you may be faced with similar issues—some states require therapists in private practice to work under the supervision of psychologists or psychiatrists. In this case, you may share an insurance plan.

Here’s why you shouldn’t rely on insurance coverage from someone else’s plan:

• Gaps in coverage – Off-duty work, volunteering, or practicing off-site is likely not covered by your employer’s insurance. Your employer’s malpractice policy also may not provide license coverage without a formal lawsuit—for instance, if a colleague or client files a complaint against you with your state’s licensing board.
• Policy limits – If legal costs have to be shared with other people in the practice, your employer’s policy limit could be maxed out, leaving you responsible for some, if not all, of your portion of the fees.
• High-risk patients – Since each mental health professional has their own clientele, you could be seeing higher risk patients than your colleagues (suicidal tendencies, personality disorders, or severe mental illness), and may need increased coverage, according to the American Psychological Association (APA).

Three Policies of Therapist Liability Insurance

Anyone who provides advice and services should take the preventative safety measure of being insured, especially in the health and wellness industries. As a mental health professional, you genuinely care about your patients and work closely with them in the hopes of seeing them thrive—but jobs in mental and physical health leave you exposed to potential lawsuits.

Therapist liability insurance will help protect you from mental, physical, and even digital claims made against you by covering you on three fronts: professional liability, general liability, and cyber liability.

Professional Liability Insurance

Professional liability insurance for therapists, also known as errors and omissions (E&O) or MedMal, is your protection against malpractice claims. Mistakes can happen no matter what career you’re in, but as a therapist, if an unhappy client, high-risk patient, dissatisfied colleague, or even an organization files a claim against you, there’s a possibility you’ll lose your license.

Professional liability insurance provides coverage against claims such  as:

• Negligence or lack of professionalism
• Failed treatment or emotional progress
• Cause of mental injury
• Not referring a patient to a colleague with specialized knowledge

The expenses associated with malpractice claims are extremely high, but this insurance policy helps cover the cost of legal judgement, defense, and potential settlements. At the very least, all therapists should have their own professional liability policy.

General Liability Insurance

Whether your insurance provider calls this policy general liability, business insurance, or commercial liability insurance, it’s an essential precautionary measure for business owners and self-employed therapists, including private practice. Unless you’re an employee of a large organization or hospital, you’re responsible for your own office space, even as a renter. 

This means you’re held accountable for any claims to bodily injury on the premises of your business or in your office, and for any sort of property damage, even in some cases, if it’s done by a patient.

Having general liability insurance will help cover legal fees, medical expenses, and expenses associated with property damage.

Cyber Liability Insurance

In an increasingly digital world, cyber liability coverage is more important than ever. Data breaches and cyber crimes can put sensitive client information, like health records, Social Security numbers, addresses, medical insurance numbers, and credit card numbers, at risk.

This insurance policy typically covers the following expenses:

• Notifying clients of a data breach
• Restoring and recovering compromised data
• Repairing damaged systems

Cyber liability policies not only help with cyber security, but also helps you avoid confidentiality violations. If client information from digital communication is compromised, and there’s no policy to help remedy the issue, it can result in claims of malpractice. Stacey Larson, the APA’s Director of Legal and Regulatory Affairs, suggests going over their Guidelines for the Practice of Telepsychology to minimize risks.

Looking to the Future

The expenses of fighting a claim made against you or having to settle out in court are unbelievably high, and their effects can derail your career. Mental health claims can drag on for years, deplete finances, and even result in a revoked license. Insurance is a small price to pay for time, money, and energy you’ll save in the long-run.

No matter if you’re an employer or an employee, a self-employed or private practice, or recent graduate looking to start your career as a therapist, you can get customized coverage immediately by reaching out to NOW Insurance. Whether you’re looking to get all three recommended policies—professional liability, general liability, and cyber liability—or to start off with simple malpractice insurance for counselors, NOW Insurance will help you find the plan that’s right for you.

Want to know the counselor malpractice insurance cost? Visit NOW Insurance for more information.

Sources: 

1. American Psychological Association. Guidelines for the Practice of Telepsychology. https://www.apa.org/practice/guidelines/telepsychology
2. American Psychological Association. 5 Ways to Avoid Malpractice. https://www.apa.org/monitor/2016/03/malpractice