How to Choose Counselor Liability Insurance

The legal risks associated with delivering therapy can be mitigated with counselor liability insurance. 

Ideally, counselors and therapists would never have to deal with legal action or litigious clients throughout their career. And while many won’t, the threat of litigation looms for all clinicians. 

It’s important to take the necessary steps to protect yourself should you ever find yourself in a legal battle—which is why counselor liability insurance is a must for all mental health professionals. 

In this article, we’ll explain what counselor liability insurance is, why it’s important, the two types of insurance to consider—general and counselor professional liability insurance—and how to vet liability insurance for mental health counselors.

Types of insurance for counselors 

Liability insurance can typically be broken down into two types: general liability and professional liability. 

General liability insurance

General liability insurance protects the insured party from physical damages. For example, if you own your office building and a client trips and falls walking up the stairs to your office. If the client sues you to cover medical bills from their fall, general liability insurance would cover the damages. 

The need for general liability insurance will depend on how and where you see clients (if you’re unsure whether you need coverage, talk to a qualified insurance professional). 

Professional liability insurance

Professional liability insurance protects the insured in the event that a professional mistake or oversight causes financial damage to a third party.

This type of insurance is generally recommended to anyone who regularly gives professional advice and/or provides a service to clients—which includes counselors, therapists, and other mental health professionals.

Counselor liability insurance, also referred to as counselor professional liability insurance, is a type of professional liability insurance specifically for counselors. It protects therapists from claims of professional negligence, professional misconduct, errors and omissions, or personal injury as a result of professional services rendered. 

Depending on the type of mental health professional and licensure, professional liability insurance may vary in coverage and name. For example, protections for student counselor liability insurance, mental health counselor liability insurance, and licensed professional counselor liability insurance are different because the liability associated with each are different. A student or pre-licensed counselor is held to different ethical and legal standards than those set by licensing bodies for licensed counselors.

For example, if your client makes a legal claim that you gave them bad advice that led to a financial loss, counselor professional liability insurance would cover the costs of that court fight, including lawyer’s fees and financial damage.

Another example is if a client claims that, as their therapist, you failed to report a case of abuse—and they want to sue you as a result. That would be another instance where counselor liability insurance would cover any costs resulting from the lawsuit (up to your total amount of coverage).

Benefits of having counselor liability insurance

There are many benefits to having professional liability insurance for mental health counselors, including:

Protection from frivolous lawsuits 

It doesn’t matter how experienced a therapist you are or how well you take care of your clients. In the United States, we live in a litigious society where any therapist could find themselves the target of a frivolous lawsuit—and, even if the lawsuit has no merit, fighting it can cost thousands (or even tens of thousands) of dollars. 

Counselor professional liability insurance will cover those legal costs so you don’t have to deplete your savings account or take on extra debt.

Protection in legitimate lawsuits

Again, even if you’re a fantastic therapist, at some point, you may make a mistake—one that could result in financial loss for a client. 

In that situation, as a therapist, professional liability insurance would cover your legal costs and any damages resulting from the lawsuit—which, again, protects your assets and keeps you from going into debt.

Small investment for peace of mind 

The idea behind insurance is that you pay a small upfront cost (your premium)—and, in exchange, you get a much higher amount of coverage should things go wrong. For example, you might get a professional liability insurance policy with a maximum payout of one million dollars. 

While, in a perfect world, you’ll never have to cash in on that policy, if and when you do, that premium will feel very, very worth it—especially when you compare it to how much you receive.

The bottom line is: professional liability insurance for counselors allows you to rest easy knowing that if you were to ever find yourself in a legal battle, you’re covered—making it an absolute must for mental health professionals.

Where to find liability insurance for mental health counselors

Clearly, counselor liability insurance is essential for protecting your practice and your assets. That said, sifting through legalese on insurance sites to find the right coverage may feel daunting

Here are a few simple suggestions on how to get your search started:

Talk to your practice owner 

If you’re part of a larger practice, you may be able to access a group professional liability plan. 

Ask your practice owner or manager what kind of insurance options they offer employees. If they offer professional liability coverage options, ask for information on coverage amounts, premiums, and policy details—as well as the process for signing up for and accessing coverage.

Talk to an insurance broker 

If you work on your own or your practice doesn’t offer liability insurance, you can talk to an insurance broker. 

An insurance broker is a professional that has relationships with a variety of insurance carriers. A good insurance broker can help you understand what kind of insurance you need, what provider would be the best fit, and can often negotiate better deals than you’d find on the open market. 

If you don’t know any insurance brokers, ask other therapists or mental health professionals in your network if they have any recommendations—or do your own research to find a qualified broker in your area.

Use an insurance quote aggregator 

Another way to get quotes from multiple carriers is to use an insurance quote aggregator, such as Insureon or Simply Business. 

These platforms have you fill out one form, which they then send out to multiple insurance carriers. Then, they send you quotes from the carriers that fit your insurance needs. 

The benefit of using an insurance quote aggregator is that it allows you to easily compare costs between insurance companies. 

On the other hand, your information is sent to multiple carriers, and most (if not all) of them will likely follow up with you—so if you don’t want to field a ton of sales calls and emails, this might not be the best option for you.

Contact national insurance providers 

Many of the larger national insurance carriers, like Progressive and Geico, offer professional liability coverage, either directly or via a third-party partner. 

If you feel more secure working with a well-known, established company, this could be a good route for you.

Contact mental health-focused insurance providers 

You can also contact agencies that specialize in coverage for mental health professionals—or have extensive experience working with therapists, counselors, and others in the mental health field. 

Examples of mental health insurance agencies include Health Providers Service Organization or CPH & Associates. 

Working with more specialized agencies has advantages. For example, they often provide better customer service for their niche clientele, and their smaller size may contribute to easily accessible and available customer support. 

If they specialize in insuring mental health professionals, they may have insight and advice on what insurance policy would be the best fit for the ethical and legal standards that apply to you and your practice.

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