Insurance is a product that everyone should have and at the same time, everyone hopes to never have to use. That’s especially the case with Psychologist Liability Insurance given this is a profession that is all about helping people.
Having insurance coverage gives peace of mind, financial stability, and protects people – not just those insured but families and loved ones of the insured as well.
For licensed and practicing psychologists who offer services to people suffering from depression, anxiety, drug abuse, or have other mental health issues, it’s a good idea to have professional liability insurance, also known as malpractice insurance. Even those who are still in the process of getting their license, such as those in graduate school will benefit from having an insurance policy.
Because you are working with patients who may be emotionally unstable, it’s necessary to get liability insurance coverage that protects you against claims of poor care and negligence.
Just like other professionals, such as doctors and lawyers, liability insurance (also knows sometimes as malpractice insurance) protects you and your practice from possible lawsuits connected to your work.
The good news is that according to the American Psychology Association, only 2% of psychologists will be sued during their careers. Nevertheless, you don’t know if you will be part of that 2% at any point in your career.
Even with this slim chance, it’s best to get liability insurance and coverage for psychologists, to prepare for anything that may happen in the future.
What does liability insurance cover?
When looking for liability insurance, it’s best to talk to an established and trusted company or insurance professional.
Insurance for psychologists is widely available but it is also a specialized area and needs an experienced insurance company to explain to you what the policy coverage is. No matter what stage you are in your psychology career, having malpractice insurance is important.
Psychologists can, and should, get both General Liability Insurance and Professional Liability Insurance. Both types of liability insurance can come from the same provider. All psychologists can benefit from having both kinds of insurance and is a good risk management strategy.
What is General Liability Insurance?
General liability insurance is also known as Commercial General Liability protects you and your staff from any errors or accidents that could happen in the course of your professional practice. This covers you against the following:
- Claims of bodily injury – a client may file a case against you for slipping in your office or falling off your chair. This type of insurance will protect you against third-party claims of bodily injury under your care and the corresponding medical costs.
- Personal injury – a client may file a case of slander or defamation against you if she thinks that you are talking about her and her case negatively to other people.
- Property damage – on a home visit, you accidentally damage or break something in your client’s home. This insurance will protect you from any cases related to this incident that may be filed against you.
This type of insurance is not just specifically for psychologists but should also be added to your policy. Claims made against you for these types of situations are not covered by professional liability insurance. Think of this extra insurance coverage as extra protection for you and your career.
What is Professional Liability Insurance?
Professional liability insurance, also known as Errors and Omissions Insurance (E&O) or malpractice insurance, protects you and your practice from any claims made by your client against you as a professional. This type of coverage is essential for all professionals. You can also consider this another tool of risk management for psychologists.
Professional liability insurance includes coverage against:
- Legal defense costs and court costs – if you get sued by a client (which hopefully will never happen) and this escalates, this type of insurance will cover your claims made to pay for your legal and court fees. This is very important because lawyers’ fees are not cheap and people have lost their life savings just to support legal battles.
- Legal defense costs related to licensing board hearings and other proceedings – this covers any expenses related to professional licensing issues that may arise. This can also cover professional services carried out as a psychologist while serving on professional boards or committees.
- Potential payment for income lost on court days – Some types of malpractice insurance will cover the income you lost on the days you have to go to court. This is also important to consider because legal cases can drag on and you don’t know how many days you’ll have to close your practice and turn down clients to attend court hearings.
- Sexual misconduct – this type of insurance will protect you from any claims made against you by a client regarding sexual misconduct that allegedly happened while you were in a professional relationship.
- Negligence – a client who has mental health issues may feel that you are not putting enough effort into her case. It could also be claimed by a client who disagrees with your professional approach and decides to claim that you abandoned or neglected her.
- Bodily and personal injury – protect yourself from any claims made against you that supposedly caused bodily or personal injury. For example, a client may claim that you hurt him during a session. Again, these types of cases against psychologists are few and far between, but
- False advertising – a client may claim that what you advertised yourself as in your flyers or posters was inaccurate and untrue. This insurance protects you against claims made regarding this.
- Protection for services provided as part of an organization or committee
How much does insurance for psychologists cost?
The annual premium of insurance for psychologists can differ depending on the insurance company you choose and the coverage of your plan, but it is generally more affordable than the premium for other medical doctors.
On average, the cost of a yearly premium for psychologists can range between $350 to $1,750 annually, depending on a number of factors, such as:
- How long you’ve been a practicing psychologist
- Any previous claims history
- The state where you live and practice
- Your desired policy limit
- If you see high-risk patients
These factors will determine how much your malpractice insurance premium will cost you. Some insurance companies offer risk management consultations online.
Most companies also have websites that show their claims made policy and claims made coverage to give you a better idea of how much your specific coverage will be.
Many insurance companies offer premium discounts and the option to apply online for a policy, making it easy for you to canvas and determine which insurance policy and coverage work best for your and your needs. Take all of these into consideration before choosing which policy to get.
A claims-made policy covers incidents that happen after coverage becomes effective. Any claims must be reported while your policy was in force. Claims made coverage is the most common type.
If you claim for something after your policy and coverage ends, it may be covered by buying an Extended Reporting Period, or ERP. Some insurance providers offer free Extended Reporting Period or “tail” to psychologists upon retirement, death, or disability. This is added coverage that you should look into.
There is also occurrence protection, or an occurrence policy, available to psychologists. An occurrence policy provides coverage against claims or incidents that happened while the policy was in effect (or the policy year), regardless of when the claim was reported to the insurance company.
This means that it doesn’t matter when the claim was reported, what is looked at is that the policy was still active when the alleged incident needing coverage occurred.
One additional factor that is important to look at when choosing your malpractice insurance provider is the quality of customer service given by the insurance company or agent.
It is essential that it’s easy to communicate and work with them to claim your policy if ever the need arises. Fortunately, there are a number of great insurance options for psychologists available today.
In summary, having the right insurance is essential for all psychologists, no matter at what stage of your career you are in – from being a graduate student, to being in the middle of building your practice, or even near retirement.
Even part time psychologists need insurance. A psychologist works with people who may have mental health issues and this can become a high-risk area, making it even more important to have the right kind of malpractice insurance and policy in effect.
No one wants to see years of hard work go down the drain, or experience your family suffering financially, because of lack of coverage or the absence of malpractice insurance. Although it rarely happens to psychologists, claims and lawsuits can drastically change lives for the worst, and it’s best to protect yourself against unknown possibilities.
The good news is that having the right coverage and working with the right insurance company ensures that your professional practice as a psychologist, and your way of life, can continue, no matter what happens.