What’s the Average Counselor Malpractice Insurance Cost?
In recent years, the number of people seeking mental health services has drastically increased. While it’s great that the stigma surrounding mental health and counseling has softened, and that your practice is able to help more people, this increase in patients also comes with a growing number of malpractice claims.
As a counselor, it’s more necessary now to have individual insurance coverage—meaning your own insurance apart from an employer. At the very least, you need professional liability insurance, an individual insurance policy that protects you from claims of negligence, malpractice, or when poor advice leads to the financial loss of a client.
How much does malpractice insurance for counselors cost? Do you need broad coverage? And why does this therapist insurance have so many price discrepancies? Learn the answers to these and more, below.
The Average Price Range
If you’ve ever searched, “average counselor malpractice insurance cost” online, you were probably provided a wide range of averages to account for therapist liability insurance as a whole. When a site says insurance for counselors costs $400 – $3,000 per year, it’s because there are other recommended policies typically included in the same coverage plan. There are three main policies of counseling liability insurance:
- Professional liability – Also known as errors and omissions insurance, this offers protection from claims of negligence, malpractice, or professional mistakes and helps with legal fees and potential settlements.
- General liability – Also known as business insurance, this is a necessity for business owners and self-employed counselors, protecting against third-party claims of bodily injury on your property or damage done to their property. It covers legal fees, medical costs, and property repairs.
- Cyber liability – If you communicate with clients digitally and process payments online, this will help protect sensitive patient information, covering the expenses associated with data breaches and cybercrimes.
Most counselors spend between $400 – $800 per year on stand-alone professional liability insurance, with the median premium being $500 per year, according to studies.
Stand-alone insurance policy rates constitute the lower end of that $400 – $3,000 range, and the higher end corresponds to getting a malpractice policy through a counseling liability plan—insurance with other policies such as general liability, cyber liability, or workers’ compensation.
Other Factors that Impact Cost
Your cost depends on your risk of facing a lawsuit, and the amount of insurance coverage you foresee yourself needing given your clientele and place of employment. But beyond the aspects that affect your own decision-making, your insurance company will also consider the following when it comes to cost:
- Revenue
- Number of employees
- Location and state laws
- Claims history
- Deductibles (higher deductible means a lower premium)
Why Malpractice Insurance Matters
The nature of being a counselor requires you to concentrate on your patients and ask them to be open with you. However, dealing with highly emotional topics, like mental illness, divorce, and alcohol or drug abuse, makes you vulnerable to professional liability claims.
Additionally, seeing higher-risk patients (those with mental illness or suicidal thoughts, personality or behavioral disorders, addiction) and discussing highly emotional topics, like family dynamics, are proven to result in more frequent and expensive claims.
As a counselor, it’s good to be positive and expect the best of yourself, your practice, and your patients, but you should still be prepared to handle whatever life throws at you.
Increasing Number of Claims
In 2019, the Healthcare Providers Service Organization (HPSO) released the second edition of their Counselor Liability Claim Report. Their findings, when compared to the first edition in 2014, are staggering.
In the 2014 dataset that spanned ten years, there were 1,043 reported incidents and claims made against counselors. In the 2019 dataset that spanned only five years, there were 5,626. Not only are the number of claims increasing, but the cost of handling each malpractice claim is rising as well.
Rising Cost of Claims
The same Counselor Liability Claim Report found that the total incurred costs for adverse incidents and claims has doubled since 2014. While less severe claims can be closed with no payments required, malpractice claims are often severe, typically taking several years to be resolved and amounting to massive fees.
These were the average expenses incurred for all counselors, regardless of specialty, following severe professional liability claims:
- With a payout or settlement – $113,642
- Two specialties with particularly high costs and their own averages: marriage/family counselors ($176,194) and mental health counselors ($137,737)
- With only legal fees – $12,251
- License protection fees – $5,4545
- Deposition assistance and record requests – $1,725
One of the major findings of the 2019 liability report is that more professional liability claims are closing within the $10,000 and $100,000 ranges than before. If faced with a malpractice claim without proper insurance, you would be responsible to pay those fees out-of-pocket.
Find Out Your Individual Coverage Cost
If you’re considering a professional liability policy and are curious about the cost of counselor malpractice insurance, speaking with an agent will give you individualized answers. Getting a free quote and personalized advice is easy with the responsive team at NOW Insurance.
You’ll be able to customize your insurance plan, so it’s tailored exactly to your needs—allowing you to save on your malpractice policy and avoid potential legal fees.
Sources:
- Insureon. How Much Does Therapy and Counseling Business Insurance Cost? https://www.insureon.com/therapy-counseling-business-insurance/cost
- Healthcare Providers Service Organization. Counselor Liability Claim Report: 2nd Edition. http://www.hpso.com/Documents/Risk%20Education/individuals/Claim-Reports/Counselor/HPSO-CNA-Counselor-Claim-Report-2019.pdf