Therapy and Counseling Business Insurance
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Professional liability / medical malpractice insurance for therapists

Professional liability and medical malpractice insurance protect therapy and counseling professionals from the high costs of legal claims related to professional negligence and mistakes.

Professional liability insurance guards against the cost of errors

A simple mistake – such as a therapist misreading a client – can result in major legal consequences. If a client or relative files a lawsuit, your small practice could face a draining legal battle.

Professional liability insurance, sometimes called malpractice insurance in the healthcare industry, provides the protection your therapy or counseling practice needs to continue offering its services while resolving a legal matter. However these policies aren't exactly the same.

Professional liability, also often called errors and omissions (E&O) insurance, provides liability coverage related to:

  • Accusations of patient neglect
  • Failure to uphold contractual promises
  • Provided incomplete or substandard work
  • Additional risks, such as telemedicine

While malpractice insurance protects therapists and counselors from lawsuits related to:

  • Pain, suffering, or mental anguish caused by you to a patient
  • Missed appointments and undelivered services
  • Economic damages from a patient's lost wages or healthcare costs

These types of coverage can be required by some states and healthcare facilities.

How do I get medical malpractice insurance?

It's easy to get free quotes for medical malpractice insurance with Insureon. We'll ask you basic facts about your business to help you find coverage that matches your unique risks and meets the requirements in your state.

Contact our dedicated medical malpractice insurance specialist to get started.

What coverage can professional liability provide for therapists and counselors?

Even the most experienced therapists, counselors, and healthcare professionals can make a mistake or be sued for a claim of substandard care, such as misdiagnoses and medication errors, as well as violating a patient's privacy.

Professional liability and medical malpractice insurance can help cover the cost of legal defense, including the cost of hiring a lawyer.

Specifically, this type of insurance coverage will help protect professional service providers and their practices from:

Advice or guidance that caused harm

An accusation of poor advice can have tremendous repercussions. For example, an occupational therapist could recommend that a client return to work before the client is ready. If that client is injured, the therapist could face a lawsuit.

Medical malpractice insurance can cover expenses related to the lawsuit, including a court-ordered judgment or settlement.

Accusations of negligence

Speech therapists, pastoral counselors, and other therapy and mental health counselors are highly vulnerable to claims of negligence. For instance, a client battling addiction could claim that a counselor failed to prevent a relapse. If the client sues, a professional liability insurance policy can cover the cost of hiring a lawyer and other legal expenses.

Mistakes or oversights

An allegation of a professional error – including a false accusation – could result in a costly malpractice lawsuit for a therapist or counselor.

Professional liability insurance can cover legal fees, settlements, and other expenses related to an alleged error or oversight.

HIPAA violations and breaches of confidentiality

If a client accused your practice of violating their privacy under the Health Insurance Portability and Accountability Act (HIPAA), it would probably be a covered claim under your professional liability insurance coverage.

Additionally, if a patient sues you for intentionally or unintentionally breaching the confidentiality agreement between you, your professional liability policy will typically cover your legal defense costs and any settlements or judgements.

Other specialized coverage options

Medical professional liability insurance for mental health professionals can include additional types of coverage for unique risks, such as:

  • Professional licensure defense coverage, often referred to as personal liability
  • Biomedical defense coverage
  • HIPAA defense coverage
  • Sexual misconduct defense coverage
  • Telehealth coverage
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What are the two types of professional liability?

Most professional liability insurance policies are written on a claims-made basis. This means that in order to collect your insurance benefits, your professional liability policy must be active:

  • When an alleged mistake occurs, and
  • When the claim is filed

With an occurrence-based policy, insurers will compensate you for losses that happen during the policy period, even if it's no longer active when you submit a claim.

If a policyholder bought a claims-made policy with a per-incident liability limit of $1 million and an aggregate limit of $3 million, the aggregate limit would remain fixed for the lifetime of the policy. However, an occurrence insurance policy resets limits annually, providing a new block of coverage to pay for claims that arise later.

This is why they often cost more, and also why insurers typically use this type of policy for general liability, umbrella liability, and commercial auto insurance.

If you want coverage for work you've done in the past, you can ask your insurer to set a retroactive date for your policy. Continuous coverage is key if you don't want to pay out of pocket for lawsuits.

How much does professional liability insurance for therapy and counseling businesses cost?

Therapy and counseling professional calculating the cost of business insurance.

Most licensed professional counselors (LPCs) pay an average of about $40 per month for professional liability insurance, but you could pay more or less depending on your risks.

Medical malpractice insurance will likely cost more due to the types of claims covered by this policy.

Insurance costs for counseling professionals are based on a few factors, including:

  • Therapy and counseling services offered, such as occupational therapy
  • Business equipment and property
  • Annual revenue
  • Where your business operates
  • Number of employees
  • Policy limits and deductibles

Other important policies for therapists to consider

Medical malpractice and professional liability insurance policies provide financial protection against accusations of errors and negligence, but they don't provide absolute protection. Accidental injuries and property damage are daily risks when you work with patients.

Other licensed professional counselor liability insurance policies to consider include:

General liability insurance: This policy can pay legal expenses related to client property damage and bodily injuries, along with advertising and personal injuries such as slander.

Business owner’s policyA BOP bundles general liability insurance with commercial property insurance at a lower rate than if the policies were purchased separately.

Workers’ compensation insurance: Workers’ comp can cover medical costs for work-related injuries. State laws usually require this insurance coverage for small businesses with employees.

Cyber insurance: Sometimes called cyber liability or cybersecurity insurance, this policy covers financial losses from data breaches and cyberattacks. While professional liability covers breach of confidentiality, it doesn't cover data breaches where bad actors knowingly steal confidential personal information.

Commercial auto insurance: This policy covers the cost of accidents involving a vehicle owned by your therapy practice. Most states require this coverage for vehicles owned by a business.

Get free quotes and buy online with Insureon

Are you ready to safeguard your therapy clinic or counseling business with professional liability insurance? Complete Insureon’s easy online application today. Once you find the right policy to meet your insurance needs, you can get proof of coverage with a certificate of insurance, and peace of mind, in less than 24 hours.

Updated: February 15, 2024
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