As an independent mental health practitioner, your insurance needs include:
- Insurance to protect your professional practice
- Insurance to protect your business
- Insurance to protect your income
The following summarizes the common types of coverage that clinicians should consider. Not all of them will apply to you. Nor is this a comprehensive list, since your particular needs and your state or provincial regulations may vary. This post is not intended as professional advice on risk management.
1. Insurance to protect your professional practice
Professional malpractice insurance: Pays for legal defense if you are sued by a current or former patient. Get as much coverage as you can afford. The highest level may provide twice as much (or more) coverage as the next level down, but will not likely cost twice as much.
Make sure the policy will pay for legal defense if someone files a complaint to your state or provincial licensing board.
Errors and Omissions insurance: If you serve on a Board of Directors, inquire whether they provide this type insurance, to defend you in case of claims against the Board
2. Insurance to protect your business
Liability insurance: If you own the building in which you practice, liability insurance covers accidents and injuries to people who set foot on your premises. If you rent space, check with the landlord whether the building's liability insurance covers your office interior.
Contents insurance: Even if you don't own the building, you should insure the contents of your office (furniture, equipment, etc.) against fire, flood, theft and other catastrophes. The cost of electronic data recovery should also be included.
Business interruption insurance: Provides income when you can’t use your office while renovations are underway after a catastrophe.
Cyber security insurance: Your malpractice insurance may cover you if your electronic data is breached and a client sues you for malpractice as a result. However, to be covered for expenses in responding to a data breach, such notifying all clients (as required under HIPAA) and paying fines, you’ll need additional coverage. Sometimes this is included in business liability policies.
Employee insurance: Unemployment Compensation insurance is generally paid as a tax to your state government. Workers Compensation insurance is usually private, with rates based on wages paid out.
Renters and subletters: Should have insurance to cover their own liability for both professional and premises damages.
Home-based office: You may need coverage in addition to your home-owner's insurance, or at least a rider on your home policy.
Other factors to consider
- Some professional malpractice policies cover physical injury to clients in your office, but this is not a substitute for full premises coverage which includes fire, theft, etc.
- Some premises liability/protection policies have a minimum premium for a certain amount of coverage. Ask about this when shopping for insurance, because you may be able to get more coverage than you originally thought, for the same money.
- Look into a personal umbrella policy, which offers coverage beyond the limits of your basic insurance.
3. Insurance to protect your income
If you develop a long-term illness or disability, you would probably need to cut back on work or stop altogether. Income from your practice would decrease or dry up.
Office overhead insurance: Helps pay office rent and other expenses while you recover.
Income protection disability insurance: Monthly payments based on your pre-disability income. Look for a policy that pays you if you are unable to work in your own occupation (vs working in a different occupation). Most policies provide coverage for only a limited time.
Long-term disability insurance: If you become permanently disabled and need long-term care, a long-term care policy may be a better option for you than relying on Social Security Disability. The younger you are when you purchase such insurance, the less expensive the monthly premiums will be.
Life insurance: Not only for family members, but also for business partners. If you are a partner in a group practice, a life insurance policy on one other will help preserve the financial stability of the practice, in case of any of the partners' death.
TIPS ON SHOPPING FOR INSURANCE
- The best deal is not always the least expensive option. A policy from Company ABC that costs half of that from Company XYZ is probably not identical. Compare the terms carefully, line by line, before signing up.
- Pay attention to the customer service before you buy. Is the agent or company responsive and helpful in answering your questions? If they treat you with indifference before the sale, they may be even less helpful when you need to file a claim.
- Consider the reputation of the company, how long they've been in business and whether they will likely be around for several years in case you need to file a claim.
For more information on business insurance, see the U.S. government Small Business Administration website. For professionally relevant information on insurance, see Financial Success in Mental Health Practice: Essential Tools and Strategies for Practitioners by Steve Walfish and Jeff Barnett.
** Thanks to Jeff Zimmerman, Ph.D. for contributing to this blog post.
Note: This is an update of a previous post.