Malpractice Insurance: Protecting Your Private Practice

Private practice malpractice insurance is a type of professional liability insurance that protects mental health practitioners from lawsuits and licensing board complaints. It covers legal defence costs if a current or former patient sues, as well as interventions to prevent lawsuits and payment for the cost of lawsuits. The cost of malpractice insurance depends on factors such as the level of risk associated with the practice, the amount of coverage sought, the practitioner's experience, and whether they have been sued or faced a licensing board complaint previously. It's important for practitioners to understand their insurance needs and the specific coverage provided by their policy to ensure they are adequately protected.

Legal defence for being sued by a patient

Being sued by a patient can be an incredibly stressful and worrying experience for a doctor. It is important to have the right insurance in place to cover the costs of legal defence.

Types of Insurance

There are several types of insurance that can be taken out to protect against malpractice claims:

• Professional malpractice insurance: This type of insurance will pay for legal defence if you are sued by a current or former patient. It is recommended to get as much coverage as you can afford, as the highest level of insurance will provide significantly more coverage than the next level down, but for a relatively small increase in cost. It is also important to ensure that the policy covers legal defence in the case of a complaint to your state or provincial licensing board.
• Errors and Omissions insurance: This type of insurance can defend you in the case of claims against a Board of Directors, if you serve on one.
• Liability insurance: This type of insurance covers accidents and injuries to people on your premises. If you own the building, you will need liability insurance. If you rent, check with the landlord to see if you are covered by their insurance.
• Cyber security insurance: This type of insurance will cover you in the case of a data breach and subsequent client lawsuit. However, it may not cover expenses such as notifying all clients as required under HIPAA, so additional coverage may be needed.

Defending a Clinical Negligence Claim

If you are facing a clinical negligence claim, there are several steps you can take to defend yourself:

• Consult a lawyer: It is important to seek legal advice as soon as possible. A lawyer will be able to assess the case and determine the best course of action.
• Gather evidence: Collect any relevant evidence, such as medical records, test results, and expert opinions, to support your defence.
• Consider settlement: In some cases, it may be possible to settle the claim out of court by offering a monetary or other agreement.
• Prepare for trial: If the case goes to trial, you will need to present your evidence and arguments to the court. This may include witness testimony, expert opinions, and other relevant information.

Emotional Support

Being sued can take a significant emotional toll on doctors. It is important to seek support and to take care of your mental health during this difficult time. Consider confiding in a trusted person, such as a family member or friend, or seeking the support of a peer or support group. It is also crucial to maintain a healthy work-life balance and engage in activities that promote competence and mastery, such as courses, accreditation activities, or leisure activities.

Prevention

While insurance and legal defence are important, the best way to avoid being sued is to practice competent medicine and have good risk-management procedures in place. This includes obtaining informed consent from patients, maintaining accurate records, and adhering to the standard of care expected of your profession.

Errors and omissions insurance

Errors and omissions (E&O) insurance is a type of liability insurance that covers claims against your business for mistakes, negligence, malpractice, or services you failed to provide. It is also known as professional liability insurance or malpractice insurance.

E&O insurance is essential as it protects your business from claims made by clients for errors or mistakes, faulty advice, or failure to provide the level of service expected. It covers the legal fees and any owed damages or settlements resulting from these claims. For example, if a client sues your business for providing inaccurate advice that results in lost revenue, E&O insurance will help cover the costs.

The average premium for a small business is around $735 a year, but the cost varies depending on the size and nature of the business. It is important to note that E&O insurance does not cover claims related to property damage, bodily injury, workplace injuries, data breaches, intellectual property violations, or criminal acts such as fraud.

Certain professions, such as attorneys, medical professionals, contractors, and real estate agents, may be required by state or federal law to purchase E&O insurance. Even if it is not mandatory, it is still a valuable investment to protect your business from potential financial strain due to lawsuits.

To obtain E&O insurance, you can start by contacting your general liability insurer, as many insurers that offer business insurance provide E&O coverage. Alternatively, you can inquire with your business insurance agent or obtain quotes online.

Protecting your business

When running a private practice, it is important to consider the costs associated with keeping the business operational, including the hidden costs. One of the greatest things about being in private practice is that it allows you to be self-employed, but this also means you need to be disciplined, self-motivated, and accountable. Planning ahead is key, and by preparing in advance, the challenges of being in private practice can become rewarding.

Liability Insurance

Liability insurance is a must for any private practice. This insurance covers accidents and injuries to people on your premises. If you rent your space, check with the landlord whether the building's liability insurance covers your office interior. If you are going to be on insurance panels, you will need liability insurance, and some states might require it for you to maintain your licence. The cost is determined by your experience level and the number of hours you work each week.

Contents Insurance

Even if you don't own the building, you should insure the contents of your office (furniture, equipment, etc.) against fire, flood, theft, and other catastrophes. The cost of electronic data recovery should also be included.

Business Interruption Insurance

This insurance provides income when you can’t use your office while renovations are underway after a catastrophe.

Cyber Security Insurance

Your malpractice insurance may cover you if your electronic data is breached and a client sues you for malpractice as a result. However, to be covered for expenses in responding to a data breach, such as notifying all clients (as required under HIPAA) and paying fines, you’ll need additional coverage. Sometimes this is included in business liability policies.

Employee Insurance

Unemployment Compensation insurance is generally paid as a tax to your state government. Workers Compensation insurance is usually private, with rates based on wages paid out.

Renters and Subletters Insurance

If you are renting or subletting, you should have insurance to cover your liability for both professional and premises damages.

Home-Based Office Insurance

If your practice is home-based, you may need coverage in addition to your homeowner's insurance, or at least a rider on your home policy.

Protecting your income

As a private practice owner, you need to protect your income in case of illness, accident, or injury. Here are some types of insurance to consider:

Office Overhead Insurance

This helps pay for office rent and other expenses while you're unable to work due to illness or injury. It covers the practice's expenses while the owner or key employee is absent.

Income Protection Disability Insurance

This provides monthly payments based on your pre-disability income. Look for a policy that pays out if you're unable to work in your own occupation, rather than any occupation. Most policies only provide coverage for a limited time.

Long-term Disability Insurance

If you need long-term care due to a permanent disability, this insurance can be a better option than relying solely on Social Security Disability. The younger you are when purchasing this insurance, the lower the monthly premiums will be.

Life Insurance

Consider life insurance not just for your family members but also for your business partners. In the event of the death of a partner in a group practice, life insurance can help maintain the financial stability of the business.

Disability Insurance

Disability insurance is another crucial form of protection for your income. It provides income replacement if you become unable to work due to a medical condition or injury. This type of insurance assists with ongoing living expenses, such as rent, mortgage payments, utilities, food, and healthcare costs. You can choose between short-term disability coverage, which typically lasts up to two years, and long-term disability coverage, which offers protection for five years or more and may include additional benefits like rehabilitation services. Ensure that your policy covers both mental and physical illnesses or injuries.

Cost of malpractice insurance

The cost of malpractice insurance varies depending on several factors. These include the type of doctor seeking coverage, the location of the practice, the amount of coverage needed, and the liability limits. For example, surgeons tend to pay between $30k and $50k in annual premiums, while other medical professionals typically pay between $4k and $12k per year. Obstetricians tend to pay the highest rates, with OB/GYNs in Miami-Dade County, Florida, paying as much as $226,224 per year. New York is the most expensive state for malpractice coverage, with doctors paying five times more than in California, Ohio, or Tennessee.

The cost of malpractice insurance for therapists and counselors, or mental health malpractice insurance, is also influenced by similar factors, such as the risk of a lawsuit, the size of the business, and the number of clients. Mental health counselors, speech therapists, and other therapy professionals pay a median premium of about $500 per year for professional liability insurance, which is also called malpractice insurance. Among therapy businesses that purchase professional liability insurance, 27% pay less than $400 per year, while 41% pay between $400 and $800 per year.

The cost of a general liability policy that includes malpractice insurance with a $1 million claim limit for therapists can range from $350 to $1,750 in annual premiums. The cost of malpractice insurance is influenced by the insurer's assessment of the risk associated with the practice, the amount of coverage sought, the therapist's experience, and whether they have been sued or faced a licensing board complaint previously.

It is important to note that malpractice insurance is crucial for any physician or therapist as it provides protection against the financial and legal consequences of malpractice claims. The coverage includes legal help, interventions to prevent lawsuits, and payment for the cost of lawsuits up to the policy limits.

Frequently asked questions