Welcome to Part 2 of this 2-Part series for physical therapists and occupational therapists considering purchasing professional liability insurance.
In case you missed it, in Do Physical and Occupational Therapists Need Their Own Professional Liability Insurance? we discussed what professional liability insurance is and why each physical therapist and occupational therapist should consider having his or her own private policy.
Now we’ll examine the details of what makes up a good physical therapy or occupational therapy professional liability policy and which companies you’ll want to consider when purchasing your own private policy.
We’ll also talk about how you might be able to catch a discount along the way.
Let’s get started.
DO I NEED A CLAIMS-MADE POLICY OR OCCURRENCE POLICY?
The two most common types of professional malpractice insurance policies you will encounter are occurrence coverage and claims-made coverage.
With occurrence coverage, you are covered for an incident which occurred during the term of the policy, even if the claim is made after the policy has expired.
With claims-made coverage, you are only covered if the incident occurred during the term of the policy AND the claim is presented while the policy is active. This is a way for insurance companies to limit their risk.
Therefore, an occurrence-type policy is recommended over a claims-made policy.
HOW MUCH PROFESSIONAL LIABILITY INSURANCE COVERAGE DO I NEED?
When purchasing a physical therapy or occupational therapy professional liability insurance policy, you will often see two numbers displayed in the following manner: $1 million/$3 million. In this format, the first number represents what is known as the per occurrence liability limit while the second number is the annual aggregate liability limit.
The per occurrence liability limit is the maximum dollar amount that your policy will cover you for each individual claim while the aggregate liability limit is the total maximum dollar amount that your policy will pay for any and all claims in a policy.
The $1 million/$3 million limits are most commonly used for physical therapy and occupational therapy professional liability policies, but some insurance companies do offer higher or lower limit options as well.
WHAT COMPONENTS OF A PROFESSIONAL LIABILITY INSURANCE POLICY MIGHT I ENCOUNTER AND WHAT DO THEY MEAN?
When shopping around for physical therapy or occupational therapy professional liability insurance, there are certain aspects of coverage you will frequently see included in a policy and other aspects that might be less commonly included but still nice to have if offered.
Not all companies define the components of their policies in the same way or even label similar components with the same names. Some companies may only place an annual aggregate limit on a certain component while other companies may place both an annual aggregate limit as well as a per claim limit.
Below is information on some of the policy components you may encounter. This is by no means an exhaustive list nor should a definition used here imply that the components in a policy you consider or purchase will be defined exactly as such. This list is simply to shed light on potentially less familiar terms in order to provide you a foundation on which to ask questions when speaking with various insurance companies or agents about their offered policies.
It is highly recommended that you contact each company you are considering and make sure you understand exactly what you would be purchasing.
A Per Incident Deductible:
Not all policies have a deductible, but some do. Be sure to clarify this before purchasing the policy so, if you end up having to use your policy, you won’t encounter an unexpected financial obligation.
A Provided Defense Attorney:
A cornerstone to any policy should include both the providing of a defense attorney if you are named in a court case along with the coverage of legal fees. Covering such fees should not depend on whether the case against you is won or lost.
Deposition Representation:
Even if you are not personally named in the court case, policies that include this component would provide you with an attorney at no cost to you if you are required to attend a deposition, even as a witness.
A robust policy would provide an annual aggregate limit of up to $10,000 even if you are not named as a party.
Defendant Expense Benefit:
This component provides you with coverage for expenses in the event you have to attend court-related events. The opportunity cost of your lost wages from inability to work that day is often considered part of the expense for which you are covered.
A robust policy would provide an annual aggregate limit of up to $25,000-$35,000. Be sure to check if there is a daily limit as well. If so, an amount of $500 per day is considered standard whereas $1,000 per day is considered generous.
You should be prepared to document your actual loss.
License Protection:
If a complaint is made against you to the physical therapy or occupational therapy licensing board, you may find yourself having to defend your own physical therapy license. Having some form of license protection in your policy can help cover some or all of the cost of such a process, depending on your policy.
A robust policy would provide an annual aggregate limit of up to $25,000.
Personal Liability Coverage:
This component provides you with coverage if a claim is made against you for something you did while at home. This might apply to telehealth.
A robust policy would provide an annual aggregate limit of up to $1,000,000.
Assault Coverage:
A policy component that provides coverage for your medical expenses and damaged property as they relate to an assault on you. The best policies not only include events in the workplace but also during your commute to and from work, and will provide you with counseling as needed to aide in your recovery.
A robust policy would provide an annual aggregate limit of up to $25,000.
Medical Payments:
This component covers medical expenses others may incur due to harm they claim you caused them while at your place of work.
A robust policy would provide an annual aggregate limit of up to $100,000 with a limit of up to $25,000 per person.
Damage to Other’s Property:
This component provides coverage for damage you may have caused to another person’s property as the result of professional services.
A robust policy would provide an annual aggregate limit of up to $10,000.
Expenses Related to First Aid:
A policy component that reimburses you for expenses you incurred, such as personal supplies utilized, due to providing someone with first aid.
A robust policy would provide an annual aggregate limit of up to $10,000.
Sexual Misconduct:
A standard component in most policies that covers you in the event it is determined that you are legally obligated to pay a specified amount due to sexual misconduct. However, watch out for exclusions due to criminal conduct.
A robust policy would provide an annual aggregate limit of up to $25,000.
HIPAA Coverage:
This component provides coverage for costs endured from HIPPA fines, legally obligated penalty payments, and the costs related to notifying patients regarding their breach of privacy.
A robust policy would provide an annual aggregate limit of up to $25,000.
WHAT DETERMINES THE PRICE OF MY MALPRACTICE/LIABILITY INSURANCE COVERAGE?
A policy’s premium often starts at a baseline level of cost, but then can increase based on certain factors. These include the following:
Working Full-Time Vs Part-Time:
If you work fewer hours, then you are less risky for the insurance company to insure. The common definition of part-time is working less than 24 hours per week whereas fulltime is often defined by insurance companies as working 24 or more hours per week. This is something you need to confirm with the company that you are considering.
Of note, if you work a fulltime job but then additionally also work a physical therapy side hustle job, having a professional liability policy for fulltime employment should still all that you would need. In other words, if you managed to work a number of hours each week that is more than the standard 40-hour fulltime work week, no matter which jobs these hours derived from, all of those physical therapy hours should still be covered by that same fulltime physical therapy professional liability policy.
Working Fulltime as an Employee vs Full as an Independent Contractor:
The cost is generally greater to purchase a physical therapy or occupational therapy professional liability policy if you are working fulltime as an independent contractor compared to working fulltime as an employee.
The amount of overall liability limits on your policy:
While $1 million/$3 million are most commonly used, higher limits will make the policy more expensive while lower limits will make it less expensive.
Occurrence vs Claims-Made policy Types:
An occurrence-type policy is often a more expensive option than a claims-made policy. This is because of the greater potential time within which a covered claim to be made.
This might be the most important justification to pay more for a more expensive policy.
For example, you can work at a job but then later decide to leave. Your coverage ends when you leave the job. All of a sudden, a claim is made against you from the previous job, but it wasn’t made while you still worked there and had coverage there. If your coverage for the previous job was a claims-made policy, you will not be covered. If you started a new job, your new insurance will not cover you either, since you did not work there when the claimed wrongful act occurred. A claims-made policy can be a problematic “Catch-22.”
Policy Components:
The components included in the policy are quite important as they are the foundation for how well your policy will protect you. It can be easy to just purchase the cheapest policy out there, but make sure you are comparing apples to apples. When comparing a cheaper policy to a slightly more expensive policy, assess why that policy is being offered at a cheaper rate. Common reasons are
- Certain components are not being included in the cheaper policy
- Some of the cheaper policy’s components are being capped at substantially lower limits
Make sure you are comfortable with the policy you are purchasing. A cheaper rate is not always bad as long as the policy you choose fits your needs.
Just be sure you know what you are purchasing so if the day ever comes where you need to rely on that policy you won’t be surprised by a lack of coverage in certain areas.
Is General Liability Being Included?
Speaking of policy components which influence policy cost, if you need general liability insurance in addition to professional liability insurance, then purchasing this additional policy will cost you more since you are now obtaining 2 policies rather than just 1 policy.
On the other hand, if your insurance company offers the components of a general liability insurance policy embedded in your private liability policy, then purchasing a general liability policy make not be needed while the cost of your professional liability policy may increase.
Overall, the bottom line is that when you get more, you usually pay more.
ARE THERE ANY DISCOUNTS?
While not all companies offer discounts, it never hurts to ask. If you are requesting a quote online and do not see an opportunity to ask about a discount, call the insurance company and inquire. Below are some of the more common discounts that exist:
Physical Therapy/Occupational Therapy Student Discount:
Being a student provides the opportunity for a much cheaper rate. This is not generally considered a discount because it is simply a different rate compared to a practicing physical therapist or occupational therapist.
Newly Graduated Physical Therapist/Occupational Therapist Discount:
Being a practicing therapist who recently graduated from physical therapy or occupational therapy graduate school can also be a discount opportunity. The definition of being a new physical therapy or occupational therapy graduate varies by company, but is typically defined as having graduated within the last 12 months.
Not all insurance companies offer this discount, but the ones that do are hoping you purchase their policy early in your career and stay with them long-term. This is not a bad thing, just know to anticipate an increase in the cost of your policy when you renew the following year and make sure that this inevitable markup is not substantially higher than industry standard.
Course Completion Discount:
Some insurance companies offer a discount if you complete a course covering risk management as they then see you as a less risky policy holder. Sometimes the insurance company may give you credit if you have already taken such a course through your employer. Sometimes they may request you to complete their own version of the course through their website.
Even if you have already purchased your policy and only now became aware of this opportunity, you may still be able to take such a course and then notify your insurance company to get the discount applied. It doesn’t hurt to ask.
Professional Membership Discount:
Some insurance companies may offer a discount if you are a member of a professional organization.
For physical therapists, the organizations you will see mentioned most often are the American Physical Therapy Association (APTA), your state physical therapy association and the APTA’s private practice section.
Insurance Company Professional Relationship Discounts:
Once you purchase a professional liability policy from an insurance company, you may then qualify to take advantage of other discounts they may have access to. For example, the insurance company you purchased the policy from may be able to provide you with a discount at another insurance company for car insurance.
FINAL THOUGHTS. . .
I hope you found the information from both parts of this series helpful. Feel free to refer back to Do Physical and Occupational Therapists Need Their Own Professional Liability Insurance? as needed.
Do you have any additional information to share? 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!
