Do Physical and Occupational Therapists Need Their Own Professional Liability Insurance?

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PhysicalOccupationalTherapyLiabilityInsurance

During graduate school, physical and occupational therapists are rarely provided with any information on what liability insurance is, whether they should obtain it, and how they should go about purchasing such a policy. Using my experience in purchasing physical therapy professional liability insurance for myself and helping my wife purchase occupational therapy professional liability insurance, this article will provide you with in-depth information on these topics to better assist you in this process.

The first part of this 2-Part series will look at whether physical and occupational therapists should purchase professional liability insurance and the different types of liability insurance to consider.

Then, in What Should Physical and Occupational Therapists Look For When Purchasing Professional Liability Insurance, we’ll learn how much liability insurance you may want to purchase, what components to look for when purchasing, how you might be able to save a few bucks getting a discount, and what companies to consider purchasing from.

Let’s get started.

I’M A GOOD PHYSICAL/OCCUPATIONAL THERAPIST, SO I DON’T NEED LIABILITY INSURANCE – RIGHT?

I know how you feel. You worked very hard to get to where you are today. You made it through high school, college (including your physical therapy prerequisite classes), got into a great PT/OT school, graduated in good standing, passed your state and national board exams and finally landed a good job. Maybe you even earned a specialty certification. Maybe you’re working a side hustle or two, diversifying your income streams. Maybe you’ve already been practicing for many years, gaining a great deal of experience along the way. How could anyone ever sue you when all you want to do is improve their quality of life?

The harsh reality is that no one ever plans on getting sued for malpractice – yet it still happens.

That is why the professional liability insurance provider CNA/HPSO shares a detailed report every few years tracking the statistics of their insured physical and occupational therapists. The CNA/HPSO Physical Therapy Professional Liability Exposure: 2016 Claim Report Update analyzed statistics of their insured physical therapists from January 1, 2010 to December 31, 2014. Similarly, the Occupational Therapy Claim Report: A Guide to Identifying and Addressing Professional Liability Exposures analyzed statistics of their insured occupational therapists from January 1, 2006 to December 31, 2015. Although both of these are now outdated, they made for very interesting reads.

Most recently, though, CNA/HPSO released the Physical Therapy Professional Liability Exposure Claim Report: 4th Edition, their newest analysis on physical therapy professional liability claims taking place between January 1, 2015 to December 31, 2019. Unfortunately, what this report detailed was not uplifting.

First, the payments incurred for claims against physical therapists during the January 1, 2015 to December 1, 2019 time period was, on average, $134,761. Not only is that a lot of money, but it is a 12% increase compared to the $119,893 figure reported between January 1, 2010 to December 31, 2014 in the previous CNA/HPSO Physical Therapy Professional Liability Exposure: 2016 Claim Report Update.

To make matters worse, 34% of closed claims resulted in payouts of at least $100,000. In other words, more than 1 out of every 3 closed claims resulted in a payment ranging anywhere from $100,000 to even $1,000,000 or more. This is also an increase of 8.1% compared to the what was found between January 1, 2010 to December 31, 2014 in the previous CNA/HPSO Physical Therapy Professional Liability Exposure: 2016 Claim Report Update.

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Finally, the analysis also found that the various settings in which physical therapists commonly work influence statistics on claims in different ways.

For example, while claims made from the acute rehabilitation hospital setting made up only 2.1% of total claims made against physical therapists during the January 1, 2015 to December 31, 2019 time period, this was also the setting where physical therapists incurred the highest average total claim payout – an astounding $190,000. In other words, while the likelihood of a claim being made against you is much lower, if one is brought against you, watch out!

In comparison, the average payment for claims against physical therapists working in the non-hospital-based outpatient setting was lower, $133,924. However, this setting represented an astonishing 86.3% of the closed claims, making it the most risky setting in which to work.

It’s hard to imagine finding yourself in a situation where you’re forced to pay such a large amount of money. Thankfully, if you pay a tiny fraction of this cost each year, physical therapy professional liability insurance can certainly help you sleep easier at night.

So what kind of liability insurance do you need?

WHAT TYPES OF LIABILITY INSURANCE ARE IMPORTANT FOR A PHYSICAL/OCCUPATIONAL THERAPIST?

Many different types of insurance exist, but there are two important types of liability insurance a physical or occupational therapist should be aware of. Each of these provides coverage for different potential risks.

Physical/Occupational Therapy Professional Liability Insurance:

Physical/occupational therapy professional liability insurance is well-suited for physical and occupational therapists, as it is designed for individuals providing their expertise in the form of a service.

Common examples of such services a physical and occupational therapist provides can range from the physical application of treatment provided to a patient, verbal or written advice provided to a patient, or the selling of a recommended product.

When treating a patient, that patient is entitled to expect a reasonable standard of care from you. A patient may decide to sue you if they feel you made an error in the service you provided them.

That is why physical/occupational therapy professional liability insurance is also referred to as malpractice insurance or Errors and Omissions (E&O) Coverage – it protects you when you are being sued for something that you should not have done (an error) or for something that you failed to do (an omission) that resulted in harm to a patient. In short, it protects you in the instances of claimed negligence or incompetence.

General Liability Insurance:

This is considered the most basic and common type of liability insurance for business owners.

Less formally referred to as the “slip and fall insurance,” it provides coverage against claims that you/your company may have caused. These include, for example, negligence leading to bodily injury, injury occurred due to liable or slander, or property damage.

Let’s say you were rushed between seeing patients and forgot to put away some piece of therapy equipment. A patient walks by, trips on that equipment, and falls, resulting in bodily injury due to your negligence.

In the home health setting, an example of property damage can be accidentally knocking over a very expensive vase while carrying your work bag inside of a patient’s home (yes, this nearly happened to me but I caught the item in midair!).

SO WHICH LIABILITY INSURANCE SHOULD I PURCHASE?

It’s evident that both of these types of insurance can be important. But which one do you need to purchase or do you need to purchase both?

Physical/Occupational Therapy Professional Liability Insurance:

Since the physical and occupational therapy professions by nature provide a service, it is reasonable for practicing physical and occupational therapists to have this type of insurance.

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An argument can be made that physical and occupational therapy liability insurance is not needed if you are supremely confident no patient will ever bring suit against you or if you have large cash reserves to cover such a potential lawsuit. However, since I am not omniscient and I can also think of better ways to use my hard-earned money such as buying a house, paying off student loans, or contributing to retirement accounts, I carry physical therapy professional liability insurance to protect myself and my wife carries occupational therapy professional liability insurance as well.

Physical and occupational therapists that own a therapy practice and employ other therapists should consider having this type of insurance as well, since it can help cover legal expenses if the business owner is sued on claims that negligent professional services were provided by one of their therapy employees.

General Liability Insurance:

While having physical/occupational therapy professional liability insurance is considered fundamental for all practicing physical and occupational therapists, having general liability insurance is likewise considered essential for small business owners.

Not every physical or occupational therapist realizes, though, that working a side hustle as an independent contractor actually makes you a small business owner. I realized the importance of this while making as much as $8,000 per month of secondary income working as a prn home health physical therapist. If this applies to you, be sure to obtain general liability insurance in addition to also having physical/occupational therapy professional liability insurance.

Do be aware that some insurance companies offer general liability coverage embedded in a physical/occupational therapy professional liability policy. That can be beneficial if purchasing separate professional and general liability policies becomes too costly. However, in that case, your professional liability policy limits will cover general liability claims, but only up to that overall policy limit. On the other hand, if you had a general liability policy separate from your professional liability policy, then each policy would have would have its own limits.

DO I NEED PROFESSIONAL MALPRACTICE/LIABILITY INSURANCE IF I HAVE AN EMPLOYER WHO ALREADY PROVIDES IT?

While it is nice for your employer to provide you with physical/occupational therapy professional liability insurance, don’t let this provide you with a false sense of security – you may still want your own private policy.

First, you should be aware that, in the event of a claim against you, the legal counsel will be provided by the employer’s professional liability insurance carrier. The employer is their client – not you.

If what is best for you and what is best for your employer are not the same, you can quickly find yourself in a perilous situation. On the other hand, if you have your own private policy, then you will have your own legal counsel who will only focus on what is best for you.

Also, a policy provided by an employer can only be used when working for that employer.

If you are working an independent contractor side hustle, you need your own professional liability coverage.

Even if you aren’t planning on working a physical/occupational therapy side hustle, you may find yourself wishing you did have your own policy.

For example, if your neighbor casually asks you to perform soft tissue mobilization (and you do so) and afterwards they claim an injury, your employer’s policy will not cover you because this did not occur at your place of employment.

DO I NEED PROFESSIONAL LIABILITY INSURANCE IF I’M A PHYSICAL/OCCUPATIONAL THERAPY STUDENT?

Even though you are a student, you can still be included in a lawsuit.

Like employers, some physical and occupational therapy programs provide policies to protect their students. However, if you are a current physical or occupational therapy student and find yourself without such coverage, you may want to look into purchasing your own policy.

Luckily, many of the top professional liability insurance companies offer policies to physical and occupational therapy students at an extremely discounted rate. Be sure to take advantage.

FINAL THOUGHTS. . .

Now that we’ve covered why you should consider purchasing physical therapy professional liability insurance, next week we will take a look at What Should Physical and Occupational Therapists Look For When Purchasing Professional Liability Insurance to learn about what policy components and insurance companies to consider when deciding which policy to buy and how you might be able to snag a discount when doing so.

Do you have any additional information to share after reading after reading about professional liability insurance for physical and occupational therapists? Any questions on aspects that may not have been covered?

Before moving on, please help make the Money Mobilizer a supportive and welcoming community for our current and future colleagues by leaving a question or sharing your knowledge below!


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