Psychology Malpractice Insurance

As a mental health professional, it’s essential to get insured in order to protect yourself. 

In this article, we’ll discuss how psychology malpractice insurance, or psychologist liability insurance, can provide you with the security and peace-of-mind to build, manage, and grow your practice.

What is psychology malpractice insurance?

There are multiple types of insurance coverage for business owners—including ones specifically geared toward therapists in private practice. 

For example, general liability insurance covers physical damages (like a client falling down the stairs at your office and breaking a bone or slipping on a wet surface in your office and hitting their head), whereas professional liability insurance protects insured practitioners against any financial damages that may occur based on their professional conduct.

Psychology malpractice insurance, sometimes referred to as psychologist liability insurance, is a type of professional liability insurance for mental health professionals, like therapists, counselors, and psychologists. 

As the name suggests, psychology malpractice insurance includes insurance for any claims of malpractice—as well as other claims like negligence, professional misconduct, or a professional error or omission.

Like other types of insurance, professional liability insurance can be paid on a monthly or annual basis, which then provides a predetermined level of coverage should you ever have to file a claim. For example, if a client takes you to court and you need to cover legal costs.

While professional liability insurance is important for most business owners, it’s particularly important for anyone who provides services and/or gives professional advice—which is why psychology malpractice insurance is non-negotiable for mental health professionals.

Some examples of situations where psychologist malpractice insurance might come into play include:

• If a client claims the advice they received during a session caused them to incur financial damages
  
• If a client accuses you of breaching moral and ethical standards for therapists
  
• If a client claims you failed to report an abuse case
  
• If a client claims you broke confidentiality
• If you fail to report that a client is at risk of harming themselves or others
  
• If you have an inappropriate relationship with a client (even if it’s consensual)
  
• If someone tries to sue you for any sort of professional actions

Benefits of psychologist insurance

Now that you know what psychology malpractice insurance is, you may be wondering why you should get it. 

There are a number of psychologist insurance benefits, including:

Protection from meritless legal action 

Some people are litigious and will look for any opportunity to take legal action against a therapist in hopes of a settlement—even if they don’t have a legitimate claim. 

But if you find yourself on the receiving end of a lawsuit, even if the case is without merit, there are costs involved. 

Professional liability insurance for therapists will cover the costs associated with frivolous, meritless lawsuits—saving you thousands (or even tens of thousands) of dollars in the process.

Protection in case of mistakes 

Mistakes happen, but they shouldn’t necessarily leave you bankrupt. 

If a case is brought against you and you are at fault, psychologist liability insurance will offer coverage to deal with the legal costs and any associated damages you owe (up to your maximum amount of coverage). 

This can not only help protect your assets, but prevent you from going into serious debt.

Low cost, high investment ratio 

When you consider the amount of coverage you can get with a malpractice insurance policy (for example, many policies offer up to a million dollars in coverage), the out-of-pocket costs are pretty minimal. 

As a therapist, of course you hope you will never need to use your professional liability insurance, however if you ever end up in a situation where you need it, the premiums you paid will feel like a very worthwhile investment.

How much does psychology malpractice insurance cost?

One important thing to consider, when evaluating professional liability insurance, is the cost.

The cost of psychologist liability insurance will depend on a variety of factors—like how much coverage you want, if you have any past claims against you, or how likely you are to face claims in the future.

However, Insureon collected data on how much insurance coverage typically costs therapists, and this is what they found: 

• 41% of therapists pay between $400 and $800 per year for their professional liability insurance
• About a third of therapists (32%) pay more than $800 per year for their professional liability insurance
• About a quarter of therapists (27%) pay less than $400 annually for their professional liability insurance

Keep in mind, costs can vary widely for different therapists and practices. In order to get a more accurate idea of what you’ll pay for your malpractice insurance, you’ll need to get a personalized quote.

High risk malpractice insurance

Generally speaking, the costs for malpractice insurance are higher for practitioners that are considered “high risk” by insurance companies—or those who are viewed by the insurance carrier as a provider that has a higher likelihood of filing a claim and using their insurance benefits.

Whether you’re considered “high risk” can depend on a few factors. The type of clients and/or population that you work with could impact how an insurance company assesses your risk level. 

For example, an insurance carrier might view a therapist who works with violent offenders as a higher risk. The insurer may anticipate a larger likelihood that these clients may engage in violent or illegal behavior that could result in the therapist getting sued by association. 

Your history could also play a role in whether you’re considered high risk. For example, if you’ve been sued for malpractice before, you’ll likely be considered a higher risk for future malpractice claims.

Providers that are deemed high risk may pay higher premiums than lower-risk providers and/or may be required to carry more coverage. For example, if you’re part of a practice and are deemed high risk, your practice owner may require you to carry a policy with a higher coverage amount. 

Where to get malpractice insurance 

Now that you know what malpractice insurance is and why it’s important, the last piece of the puzzle is: Where should you look for coverage?

There are a variety of places to get professional liability insurance as a mental health professional, including:

Your company 

If you work for a larger practice or mental health company, you may qualify for company benefits—including malpractice/professional liability insurance. Talk to your supervisor or practice owner to learn more about your options.

An insurance broker 

Insurance brokers work with multiple insurance carriers to find the best coverage options for their clients. 

Working with a broker can be a great fit if you need guidance on what kind of coverage could be the right fit for you and your practice. Depending on your situation, they may also be able to help you save money on your premiums, since their existing relationships with insurance carriers sometimes give them access to better deals.

Online insurance quote generators 

There are a number of insurance resources (like Insureon or Simply Business) that allow you to receive and compare quotes from a variety of providers. 

The benefit of using a resource like this is that you can get cost information from a number of different providers through a single application, which can help you compare costs and coverage. 

Unfortunately, as part of using these online services, your information will be shared to many providers. So there’s a high chance that representatives from each of those providers will reach out via phone or email to talk about your coverage—which can, for some people, feel overwhelming or unwelcome.

An insurance carrier 

You can also reach out directly to agents for different insurance carriers—including larger national insurance carriers (like Geico or Progressive), or a carrier that offers coverage specifically tailored to mental health professionals (like Health Providers Service Organization or CPH & Associates). 

You will have to reach out to multiple carriers to get quotes, but this can be a great way to speak directly to an agent, get your questions answered, and find the carrier and policy that feels right for you at your convenience.

How SimplePractice streamlines running your practice

SimplePractice is HIPAA-compliant practice management software with everything you need to run your practice built into the platform—from booking and scheduling to insurance and client billing. 

If you’ve been considering switching to an EHR system, SimplePractice empowers you to run a fully paperless practice—so you get more time for the things that matter most to you.  

Try SimplePractice free for 30 days. No credit card required.