Psychologist malpractice insurance is
a form of professional liability insurance. It is crucial for all psychologists to have, especially in today's
increasingly litigious society. Most psychologists whose practices are not yet well-established don't have the
funds to foot a lawsuit. Malpractice insurance covers most or all of these incidences, provided they match the
requirements for being considered as malpractice.
There are two important types of coverage to choose from - occurrence and claims-made. Occurrence insurance covers
a specific amount of incidences. For each incident, there is a maximum dollar-amount allowance provided. For
example, an occurrence policy may have provisions for $1 million per incident, with up to $3 million allowed to be
spent each year.
Psychologist Malpractice Insurance -
What You Should Know
In the previous scenario, any one
incident could not exceed $1 million. If it did, the psychologist or their business would be responsible for the
remaining balance past the $1 million. Only three incidences would be covered if they required the maximum amount.
However, if there were six incidents that each cost $500,000, this would be acceptable, as it would fall under the
$3 million annual allowance in the psychologist malpractice insurance policy.
Claims-made policies provide coverage for claims that are filed. Whether or not the psychologist chooses to file a
claim for a lawsuit resulting from alleged malpractice is up to their discretion. If a client filed a $20,000
lawsuit and the psychologist thought it better to simply pay it, there would be no need to file a claim. Each filed
claim results in a potentially-higher premium amount in the future.
Psychologist Malpractice Insurance
There is one more important thing to
remember about the two different types of policies. A claims-made coverage plan may not provide retroactive pay for
incidences that happened further in the past. However, retroactive pay is offered through occurrence coverage,
assuming the policy was active at the time of the past incident. This is one major benefit that occurrence coverage
has over claims-made insurance.
Choosing which type of psychologist malpractice insurance to buy is entirely up to the individual psychologist or a
group practice. Some insurance companies offer discounts for group practices that have more than two psychologists.
Premium amounts vary depending on the type of policy chosen and the state of residence. Most are at least $1,500
annually, assuming there is a clean claims history. Some states' laws differ greatly for this type of coverage.
Arkansas and Washington are the two states with the most unique laws.
Last modified: May 15,