Malpractice insurance stands as a crucial safeguard for counselors navigating the complexities of the mental health profession. This specialized insurance coverage acts as a safety net, offering protection against potential legal claims or allegations of professional negligence. In the counseling realm, where the intricacies of client interactions and treatment modalities can vary significantly, having malpractice insurance provides a layer of security, enabling counselors to focus on their practice without the constant worry of litigation risks. It not only offers financial protection but also instills confidence, allowing counselors to deliver therapeutic services while maintaining professional standards and ethical practices. “What does malpractice insurance cover in counseling?” Keep reading.
No mental health professional enters into the mental health industry planning to be subject to a malpractice lawsuit. Malpractice insurance for mental health professionals is not a fun topic but it is certainly an important one.
In this post, we will highlight the essentials of malpractice insurance that can help you make a decision whether you need it or not.
Benefits of Malpractice Insurance for Mental Health Professionals
Malpractice Insurance offers extensive protection to you as a mental health professional if you’re sued. While each policy is unique, here are some general benefits of owning malpractice insurance:
- Interventions to Prevent Lawsuits – If a client / patient threatens to sue you, your malpractice insurer can step in before the suit is filed. They can send letters to your client on your behalf and/or devise a strategy to deal with a potential lawsuit.
- Legal Help – A great benefit of malpractice insurance is that your insurer will appoint a highly skilled lawyer who knows malpractice laws in your state to advise and protect you.
- Payment for Costs Associated with Lawsuits – One of the primary benefits of malpractice insurance is having the costs associated with lawsuits get covered up to your policy limits.
- Having a good lawyer selected by your malpractice insurer – As mentioned above, having a high-quality lawyer appointed is crucial to the success of your case.
- Financial security – Not having to worry about paying a massive some of money in a lawsuit is a major benefit of having malpractice insurance.
- Help with your licensing board for complaints – Many malpractice insurers will represent you before licensing boards.
- Peace of mind – Can you really put a price tag on piece of mind? Having malpractice insurance will ensure that you can be in peace if you face the unfortunate event of being sued for malpractice.
The benefits of having malpractice insurance far outweigh the negatives of not having malpractice insurance. Even if you may be covered by malpractice insurance in a practice you work in, it’s important to know the limits of your coverage and how you may still be at risk personally.
How to Avoid Malpractice Lawsuits
1. Avoid Multiple Relationships
Engaging in a sexual relationship with a client or patient is the most common multiple relationships we think of, but it extends beyond this. Going beyond the therapeutic relationship, such as hiring your patient to cut your grass, is problematic and can increase your chances of a malpractice complaint. Another example would be to accept “friendship” for a patient online, such as on Facebook or Instagram. This can blur the lines of objectivity for both sides, and confidentiality could be compromised in such a scenario.
2. Set Clear Guidelines from the Get-Go
Setting clear guidelines from the beginning of what services you’ll be offering and what is within the boundaries of your services is important. Getting in situations where you blur the lines of informed consent, such as working with children and suddenly having to do counseling for a parent whose parents are divorcing, will be outside the scope of what the therapist was hired for.
3. Make Sure You’re Covered with Malpractice Insurance
Depending on your exact profession (e.g. psychologist, psychiatrist, etc.) and the type of work you do, and the level of risk your patients present, it’s important to know how much coverage you need. Malpractice lawsuits can cost a ton of money, ranging in the 6 figure territory, such as the documented case of a mental health counselor’s romantic relationship with a patient that led to a $150,000 settlement and $11,780 in legal expenses. Are you covered for these types of costs?
4. Stay Connected with Mental Health Organizations
Belonging to organizations such as the APA’s Practice Organization or your state’s psychological association can help you stay up to date on new changes that can affect your practice. A 2012 study found that the likelihood of being disciplined by a state board of psychology was lower for psychologists who belonged to their state psychological association.
3 Types of Malpractice Coverage
1. Professional Liability
Professional malpractice liability protects a practitioner from claims of negligence, malpractice, or professional mistakes that can happen. This type of coverage generally helps with legal fees and potential settlements.
2. General Liability
General malpractice liability, also known as business insurance, is very important for private practice owners to protect against 3rd party claims of bodily injury while on your property or damage done to their property. This type of coverage generally covers legal fees, medical costs, and property repairs.
3. Cyber Liability
Cyber liability coverage protects you if you communicate with clients digitally and process payments online. This liability coverage can protect you against data breaches and cybercrimes.
Malpractice Insurance for Counselors, Therapists, Social Workers, and Psychologists
Risk Factors For Malpractice Lawsuits
Here are some risk factors for malpractice lawsuits for social workers
- Having sexual relations with a client
- Failing to report child abuse cases
- Not following through on your duty to warn, which mandates that mental health professionals must notify 3rd parties or authorities if a client is suicidal or homicidal
- Not protecting a client from themselves, such as when a client is a credible risk of suicidal behavior, and the mental health professional does not intervene
This is by no means an exhaustive list of reasons you may be sued for malpractice.
Average Cost of Malpractice Insurance for Counselors
On average, malpractice insurance for counselors costs between $400.00 and $800.00 per year for standalone professional liability insurance, or between $400.00 and $3000.00 per year (typically on the higher side) for a plan that includes professional liability, general liability, and cyber liability.
Malpractice Insurance for Psychiatrists and Nurse Practitioners
Malpractice insurance for psychiatrists and nurse practitioners is perhaps even more important because the increased risks of prescribing medicine to patients.
Risk Factors For Malpractice Lawsuits
Psychiatrists can face malpractice lawsuits from a number of situations. According to the NIH, here is a list of surefire steps in increase your risk of malpractice lawsuits:
- Documenting only the first suicidal risk assessment done on a patient (not documenting ongoing evaluations)
- Allowing patients with suicidal behaviors to slip through the cracks and not follow up
- Neglecting to document a clinical basis for changing the level of patient supervision and / or level of care for patients with suicidal behaviors
- Not responding to family members of patients with suicidal behaviors
- Not properly evaluating the safety or the environment for a patient with suicidal behaviors
- Prescribing lithium without conducting regular tests on lithium and electrolyte levels and monitoring appropriately
- Prescribing psychotropic medications without going through the informed consent process
- Not documenting which medications were ordered, the basis for prescribing, and any changes made to medications
- Sending a patient’s overdue bill strait to collections without consulting with them first
- Providing care that falls below the standard of care since the patient cannot pay you properly for your services
- Not conducting a thorough neurological evaluation on a patient who appears to have a decreased level of consciousness, altered mental state, or who falls during hospitalization
- Stopping treatment with a patient in crisis, or a patient that has been assessed to be a danger to themselves or others
- Ignoring a subpoena for patient records or to testify
- Not establishing a patient record for a patient with very sensitive issues
- Changing a patient record after an adverse event
- Being in a sexual relationship with a patient
Phew, what a list! This list is by no means an exhaustive list of risk factors for malpractice lawsuits against psychiatrists, but it will get you thinking about getting malpractice insurance just in case.
Average Cost of Malpractice Insurance for Psychiatrists
The average cost of malpractice insurance for psychiatrists can vary wildly by the city and state the psychiatrist lives in. For example, the average premium in Phoenix costs $10,000 per year, and in Miami it costs $20,000 per year. The highest average malpractice insurance premium according to medpli.com is in New York City, costing a whopping $28,000 per year. But with 2-3% of psychiatrists in the United States each year facing malpractice claims and 41% of psychiatrists being sued for malpractice at least once, it’s essential that psychiatrists have quality malpractice insurance.
Average Cost of Malpractice Insurance for Nurse Practitioners
Like psychiatrists, the rates of malpractice insurance for nurse practitioners varies between states and cities. The cost, according to cunninghamgroupins.com, is between $800 and $2200 per year.
How to Sign Up for Malpractice Insurance
Many insurance companies provide malpractice insurance. You can also check with professional organizations that you belong to to see if there are discounts that can be provided for being a member. Signing up for malpractice is relatively easy and requires you to fill out some forms online about you and your practice.
The challenge you’ll face is determining which type of cover you will need. The “cheapest” is usually not the best and may not fit your specific practice’s needs.
Final Thoughts on Malpractice Insurance
While the idea of being sued for malpractice is not something any one of enjoys thinking about, it’ exists and it’s important that you protect yourself from unnecessary risks you face each and every day.
TherapyPatron.com helps mental health professionals better serve their clients. Our (editable, fillable, printable PDF) therapy worksheets can help you streamline your practice, effectively deliver different types of therapy, and support your clients be the best version of themselves.
Note: TherapyPatron is in no way, shape, or form associated with any malpractice insurance companies. This blog serves for informational purposes only.