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.
Insurance to protect your professional practice
Professional malpractice insurance will pay 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 that your malpractice insurance includes payment for legal defense if someone complains to your state or provincial licensing board.
If you serve on a Board of Directors, inquire whether they provide "Errors and Omissions" insurance. This would provide defense of claims against the Board.
Insurance to protect your business
If you own the building in which you practice, you'll need liability insurance to cover accidents and injuries to people who set foot on your premises. If you rent space, check with the landlord as to whether the building's liability insurance covers your office interior.
Even if you don't own the building, you should insure the contents of your office - furniture, equipment, files and other items. In case of fire, flood, theft and other catastrophes it would cost a lot of money to replace them. You should also insure against the loss of business while renovations are taking place, and the expense of restoring damaged electronic data.
If you have a home-based office, you may need coverage in addition to your home-owner's insurance, or at least a rider on your home policy.
If you have employees, you'll need Workers Compensation insurance and Unemployment Compensation insurance. Rates for these are based on wages paid out. Unemployment insurance is generally paid as a tax to your state government.
Renters and subletters should have insurance to cover their own liability for both professional and premises damages.
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.
Insurance to protect your income
Think about what might happen if you suffered 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.
To help pay office rent and other expenses while you recover, there is Office Overhead insurance. This is separate from Income Protection disability insurance, which pays you a certain amount per month, based on your pre-disability income. When shopping for this type of insurance, look for one that pays you if you are unable to work in your own profession. Some policies will refuse to compensate you if you can do any type of work in any occupation.
Disability insurance typically covers a limited period of time. 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 is important if other people are depending on you for financial support. This includes not only family members, but also 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.
Where can I find the best deal on insurance?
The best deal is not always the least expensive option. A disability 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.
Also 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 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.