What Is Malpractice Insurance for Therapists?

Medical professionals are encouraged to take out malpractice insurance to cover damages and costs arising from errors or negligence. Mental health professionals also have the opportunity to protect themselves and their practices from liability following potential breaches of duty.

Malpractice insurance for therapists helps defray costs and unexpected damages that can result from patient sessions and misdiagnoses. This post looks at what this kind of insurance can provide and what carriers offer the best coverage for a therapist’s budget.

Understanding Malpractice Insurance for Psychotherapists and Counselors

Malpractice litigation is part of the reality of working in healthcare. Just as physicians and surgeons face legal challenges from alleged negligence or mistreatment, psychological professionals need protection from claims or lawsuits arising from their sessions and treatments.

Professional liability insurance for therapists covers claims that arise from negligence, misinformation, misrepresentation, inaccurate or inappropriate advice and other conditions and violations linked to mental health counseling and treatment.

In addition to one-on-one counseling, malpractice insurance for therapists includes the concept of “event insurance.” This protects mental health professionals from claims associated with gatherings involving mental health advice and support, such as the following:

• Seminars 
• Group therapy 
• Workshops 
• Retreats 

Event insurance covers professional liability and damages according to the size, location and activities of the event in question.  

Why Should You Get Individual Malpractice Insurance?

Malpractice insurance is essential for therapists for several reasons. For instance, it allows these professionals to:

• Have protection against negligence or erroneous practices
• Get coverage for legal expenses, including court costs and attorney fees
• Safeguard personal assets and financial security
• Meet the insurance requirements of licensing authorities and associations
• Reassure clients about their commitment to ethics and responsibility

Therapists who take out malpractice insurance can feel confident about their coverage in case their treatment plans encounter unexpected problems.

What Does Therapist Insurance Cover?

Malpractice insurance for therapists covers a few specific areas of liability and expenses.

Professional Liability Insurance

Professional liability insurance protects therapists from misdiagnosis, negligence, treatment errors and other failures or shortcomings incurred during duty. Insurance can also cover failures to refer the patient to other professionals and acts of self-harm committed by the patient.

HIPAA Violations and Breaches of Confidentiality

Another area that malpractice insurance for therapists can cover is specific violations of the Health Insurance Portability and Accountability Act (HIPAA). This legislation sets standards for the sharing and access of patients’ health information. 

Therapists may face liability for their lack of data security, improper documentation or poor staff training. They may also be responsible for inadvertent disclosure, data theft, accidental access, improper disposal and other breaches of patient confidentiality.

Deposition Representation

Malpractice insurance can help therapists make up for legal fees and costs arising from testimony and depositions related to pending lawsuits or complaints. The policy may cover attorney fees, witness preparation, advice and transcriptions of live or videotaped depositions.

Defense Costs

Therapists who have malpractice insurance can be protected from expenses incurred in the process of their legal case, including the following: 

• Legal representation  
• Expert witness consultations 
• Investigations 
• Arbitration 
• Settlements 
• Appeals 
• General court costs 

This coverage can limit or eliminate a therapist’s out-of-pocket payments for typical legal costs.

Other Insurance Coverage to Consider

In addition to malpractice insurance, therapists are advised to look into other specific insurance coverages, including:

• Personal injury: Damage to patients or others beyond professional duties
• Bodily injury: Physical harm or injury from accidents or events in the office
• Property damage: Harm to physical possessions in the act of treatment
• Defendant expense benefit: Legal costs, lost income, transportation and other expenses related to witness testimony
• Assault coverage: Violent acts or intentional abuse committed by the therapist
• Medical payments: Medical expenses arising from the therapist’s actions, irrespective of fault or liability
• Sexual misconduct: Harassment, abuse and other inappropriate sexual allegations
• Telehealth: Insurance covering electronic communications with clients

Some of these coverage options may be covered by a medical malpractice policy. Make sure you’re fully educated on what your policy offers and what you may need to arrange for in a separate one.

How Much Malpractice Insurance Do You Need?

The amount of malpractice insurance a therapist needs depends on several factors related to your practice. No magic number will keep you fully protected. Some considerations to think about include:

State Requirements

Some states have minimum requirements and mandatory coverages for malpractice insurance. Research your state’s laws to learn whether it’s one of them and what its standards are.

Practice Scope

Therapists who work with high-risk patients or certain specialized areas may need alternate or additional coverage than others. Working with extra vulnerable patients, like those who have suffered intense trauma or deep illnesses, may incur elevated risks.

Type of Practice

Therapists who work in private, individual offices might have insurance issues that aren’t as prevalent or typical as those who work in group practices or institutional settings.

Contractual Stipulations

A therapist who is contractually obligated to an agency, outside employer or another third party may be required to take out different levels of insurance as part of their signed agreement with those parties.

Personal Finances

Malpractice insurance for therapists should cover enough damages to limit exposure to personal finances and accounts.

How Much Is Malpractice Insurance for Therapists?

Premium costs for malpractice insurance for therapists vary according to policy limits and specific coverages. According to Insureon, counselors spend a median of $350 annually for general liability insurance. Almost 80% of counselors and therapists pay less than $400 a year, and very few spend more than $600 for complete coverage.

Insureon also says that 82% of therapists and counselors take out general liability policies with per-occurrence limits of $1 million and aggregate limits of $2 million. Additional coverage for business property, workers’ compensation and professional liability can add a few hundred dollars to your premium. 

How to Apply for a Policy

To apply for malpractice insurance for therapists, take the following steps:

• Search for and get in touch with a qualified therapy malpractice insurer.
• Get providers’ quotes — many offer these for free.
• Select the right provider, choose your policy and pay the upfront premium.

If you encounter claims or other legal issues related to your practice, call your insurance provider for assistance.

Find the Best Insurance for Therapists From Benzinga’s Top Providers

Which companies provide the best malpractice insurance for therapists by the dollar? This table outlines some of Benzinga’s top-rated companies.

Malpractice Insurance for Therapists: A Modern Necessity

Mental health practitioners and therapists offer a vital service to those who need help. Sometimes, through no fault of their own, these professionals may commit errors or accidents that could hurt them financially. 

Malpractice insurance can take the edge off those concerns. In turn, it allows therapists to continue the work they’re committed to.

Frequently Asked Questions