Malpractice lawsuits typically occur when a client, or someone close to the client, believes a therapist failed to provide the correct level of care. There are many reasons why this may occur, and while all therapists want to do what’s best for their clients, human error can still occur.
Malpractice insurance provides protection for you and your practice in the event of a lawsuit. In this guide, we’ll take a closer look at what malpractice is for a therapist, and how insurance can protect you.
Malpractice Lawsuits: The Risk
As a therapist, there will be times when you’re forced to face an ethical conundrum. You are being trusted with sensitive information, and knowing the right time to intervene with a client isn’t always clear-cut. Unfortunately, a wrong judgment call can result in a malpractice lawsuit.
The risk of a malpractice lawsuit will fluctuate depending on the type of clients you treat. If you often work with clients who have a history of violence or self-harm, then the risk of a lawsuit does increase.
You will have to make judgment calls about when a client poses a threat to themselves and others. As a human, you can’t always make the right call.
The Trust, a professional liability insurance provider, estimates that roughly 2% of psychologists will have a malpractice lawsuit filed against them. They also estimate that roughly 40% of psychologists will face a licensing board complaint.
A client can choose to sue if they believe you didn’t react appropriately, or failed to react when necessary. It will then be down to the court to decide the outcome.
Even if they rule in your favor, a lawsuit is difficult, time consuming, and expensive.
What Does Malpractice Insurance Offer?
Malpractice insurance isn’t a one size fits all coverage, and your protections will vary depending on the type of practice, and the insurance provider you use. However, malpractice insurance typically offers:
- Coverage of fees and payments. Lawsuits can be expensive, and malpractice insurance can offer you some financial protection, even if you lose. Malpractice insurance can cover attorney and arbitration fees, court costs, and even settlements. So, if you do face a malpractice lawsuit, it won’t result in bankruptcy.
- Legal representation. In the event of a lawsuit, malpractice insurance will typically ensure that you have access to good representation. By working with a lawyer who understands malpractice laws, there’s a better chance that any frivolous lawsuits will be dismissed quickly.
- Intervention before a lawsuit is filed. Even a frivolous lawsuit that is quickly dismissed can cause a lot of stress. Malpractice insurance can potentially prevent lawsuits from being filed, by communicating with the client on your behalf.
- Assistance with licensing board complaints. Malpractice lawsuits are a risk for any therapist, but they’re much less common than licensing board complaints. Many malpractice insurance providers offer representation in licensing board complaints, as well as lawsuits.
- Additional peace of mind. Many of the calls you make as a psychotherapist are subjective. At any given moment, you need to focus on doing the best for your client, rather than worrying about potential lawsuits. When you have good malpractice insurance, you have better peace of mind.
How Much Does Malpractice Insurance Cost?
The cost of malpractice insurance is dependent on several factors, and it’s worth shopping around to find a policy that suits you. Weigh up the level of coverage in comparison to price when making your decision.
Factors that may affect the cost of malpractice insurance include:
- The risk level of your practice. If you frequently treat high-risk clients, such as those with a history of violence, expect a higher premium. The risk level will be assessed by the insurance provider.
- The level of coverage. Deductibles and policy limits will both affect the cost of your insurance. However, for a high-risk practice, it’s often worth paying extra.
- If you’ve been sued before. Expect a higher premium if you’ve previously faced a malpractice lawsuit, or a licensing board complaint.
- Where you practice. The state you work in can greatly affect the cost of malpractice insurance, depending on the legal climate.
Does Malpractice Insurance Cover All Lawsuits?
Malpractice insurance won’t necessarily protect you against all lawsuits. Your level of protection will depend on which policy you choose, so be careful when making a decision.
Allegations regarding sexual misconduct and physical abuse may not be covered by your policy. Malpractice insurance typically won’t cover inappropriate alteration of medical records, and other forms of criminal activity.
Malpractice insurance only covers malpractice lawsuits, not other forms of lawsuits. For example, if a client sustains an injury on your property and files a lawsuit, your malpractice insurance won’t offer any protection. Instead, you’ll need professional liability insurance.
Will My Employer Provide Malpractice Insurance?
If you’re a psychologist in employment, and not self-employed, you may already be provided with malpractice insurance by your employer.
However, it’s vital to check just how much that policy covers, and determine if there are any gaps in the coverage that may leave you vulnerable.
Malpractice insurance provided by your employer may primarily protect your employer’s business interests, rather than your own. Even if you have malpractice insurance as an employee, you may still want to invest in separate, more inclusive coverage.
Do Therapists Need Malpractice Insurance?
Yes, any therapist should invest in malpractice insurance, especially if it isn’t offered by an employer.
Even if it is offered by your employer, check the coverage plan in case of gaps that leave you vulnerable. Malpractice insurance offers legal and financial protection in the event of a lawsuit.
As a therapist, you always want to do what’s best for your client. But malpractice lawsuits are a real risk for any therapist, and even a frivolous lawsuit that’s quickly dismissed can result in stress, and a financial loss.
Malpractice insurance provides you and your practice with protection.
When choosing insurance, closely consider the type and level of coverage you need. Many insurance agencies offer malpractice insurance, so take the time to review a range of policies before making your choice.