What Types of Insurance Do Therapists Need?

Therapist insurance is crucial for keeping mental health professionals, massage therapists and physical therapists safe from liability claims and protecting against financial burdens arising from damaged or destroyed equipment. Coverage should include at least general liability, professional liability and possibly commercial property insurance to combat today’s litigious society.

Key Takeaways Therapists may be required to have general liability insurance and professional liability insurance to practice, depending on the state and the type of work. Therapists face specific risks that may lead to liability claims such as misdiagnosis, HIPAA violations, bodily injury and general accidents that can occur within the therapist’s office. The cost of therapist insurance varies based on factors like coverage type, policy limits, claims history and years in practice.

Do You Need Insurance To Be a Therapist?

Mental health professionals, massage therapists and physical therapists may be required to have some level of insurance depending on the state and the type of therapy. California, for instance, requires licensed marriage and family therapists (LMFT) to have general and professional liability insurance with minimum limits of $100,000 per occurrence and $300,000 aggregate plus workers' compensation if applicable.^[1]

Even professionals who deliver alternative therapy should buy insurance. Acupuncturists and hypnotists, for instance, are still vulnerable to liability claims.

What Types of Insurance Do Therapists Need?

Whether your therapy business is a sole proprietorship or an LLC, you will need several types of therapist insurance to protect against claims of bodily harm, property damage, defamation and negligence. We've supplied you with several options you can learn about and consider for your practice.

General Liability Coverage

General liability insurance protects therapists by covering expenses related to third-party claims of bodily injury or property damage resulting from therapy sessions. For example, say a massage therapist applies a hot stone on a client that is too hot and causes a burn. General liability insurance would cover the client’s medical bills and legal defense costs if the business was sued.

In addition, this policy should cover your expenses if an individual or business accuses your therapy business of defamation. Note that you can also get therapist liability insurance through a business owners policy (BOP), which also includes business property insurance and business interruption insurance.

Professional Liability Coverage

Professional liability insurance protects therapists against claims and lawsuits arising from alleged negligence or misrepresentation in performing their professional duties. This can include malpractice claims such as misdiagnosis, negligence in care and improper treatment.

For example, if a psychiatrist prescribes medication to a client that consistently causes adverse reactions, the clinician's professional liability policy will help cover any legal fallout that may come their way should the client decide to sue for negligence. Similarly, physical therapy professional liability insurance would help cover costs if a massage therapist injures their client during a session.

Professional liability insurance for therapists can also cover claims of breach of confidentiality or failure to obtain informed consent.

Additional Insurance Policies Therapists Should Consider

Several other coverages exist that can help therapists protect themselves, such as:

• Cyber liability coverage: Protects from the financial losses and liabilities associated with cyber attacks, data breaches and other cyber-related incidents and is designed to help manage the costs and potential legal consequences of cyber incidents, including identity theft and network damage.
• Commercial property coverage: Covers business property such as furniture, computers, massage tables and any rented office space against damage caused by windstorms, fires and other perils.
• Commercial umbrella coverage: Extends the limits of your liability policy, acting as an additional safety net for high-cost or catastrophic claims in which a client sues you for malpractice and is awarded a settlement over your liability policy's base limit.
• Sexual misconduct liability insurance: Covers therapists who are charged with sexual harassment towards clients by providing financial protection for legal fees, settlements and reputational harm.
• Workers' compensation coverage: Provides financial assistance to employees who are injured or fall ill due to a work-related reason and is required in most states.

Types of Risks That May Require Liability Insurance for Therapists

We've identified some of the most common risks associated with the applicable field of medicine. This is not exhaustive and there can be overlap between risks and professions.

Mental Health Professional

Misdiagnosis is one of the most common liability risks a mental health professional faces and occurs when a patient is incorrectly diagnosed or a diagnosis is not reached. As a result, the patient’s progress hinders or their condition worsens.

To prevent misdiagnosis, behavioral health professionals should practice risk management by effectively communicating treatment plans, analyzing patient data, documenting suicide risk assessments, maintaining updated records, providing suicide education and reviewing treatment history.

Health Insurance Portability and Accountability Act (HIPAA) violations are another serious concern.

Health counselors have a legal and ethical duty to maintain client confidentiality, except in specific situations where there is a risk of harm to the client or others or through legal channels. Inadvertently or intentionally breaching confidentiality can lead to legal consequences.

Therapists must also be wary of dual relationships, where a counselor has a personal or non-professional relationship with a client. These can create conflicts of interest and liability insurance for counselors will be necessary if the client suffers a loss due to decisions guided by impaired objectivity.

Physical/Massage Therapists

Since physical and massage therapists both physically engage with their clients, they face similar risks involving bodily injury. Imagine a physical therapist who contorts a client’s body too far, causing severe pain to the client's back, or a massage therapist who kneads a muscle too aggressively. In either case, physical therapy liability insurance can help them manage a costly lawsuit.

The physical nature of these alternative therapeutics also puts the practitioner at an increased risk of sexual harassment charges. Perhaps a client felt they were inappropriately touched during a massage and the professional needs to rely on their massage therapist insurance policy to cover the pending lawsuit expenses.

Another risk is known as “failure to refer.” This occurs when the physical therapist or massage therapist does not refer their patient to an appropriate professional. An example would be a massage therapist not referring a client to a chiropractor or orthopedic surgeon when he or she has a herniated disk.

Outside of the unique risks associated with any therapist, they can also encounter more common risks, such as a client tripping over an uneven rug while at the therapist's office or a massage table breaking during a session.

How Much Does Insurance Cost for Therapists?

The cost of therapist insurance can range from as low as $20 to hundreds of dollars per month and will depend on factors, including the type of coverage you choose, your policy limits, whether or not you have a claims history, how long you've been practicing and your healthcare profession.

Below, we've provided a breakdown of the cost of coverages per month.

Insurance Type	Monthly Cost
General liability[2]	$11-$100+
Professional liability[3]	$18-$100+
Cyber liability[4]	$54-$196
Commercial property[5]	$17-$100+
Commercial umbrella[6]	$33-$208
Workers’ compensation[7]	$70

How To Get Insurance for Your Therapy Business

Here are some steps you can take to obtain insurance for your therapy practice, whether it’s a new business or a long-time enterprise:

1. Determine the type of insurance you need: This can include professional liability insurance, general liability insurance and commercial property insurance.
2. Research insurance providers: Look for insurance companies specializing in providing coverage for therapy businesses. Seek recommendations from colleagues, professional associations or online forums.
3. Obtain multiple quotes: SmartFinancial can potentially compare multiple commercial insurance quotes in minutes and match you with a policy.
4. Evaluate coverage options: Consider factors such as coverage limits, exclusions, deductibles and any additional features or endorsements offered. Ensure that the policies cover the specific risks and liabilities associated with your therapy practice.
5. Consult an insurance professional or attorney: They can provide guidance and help you make informed decisions.
6. Purchase the insurance policy: Ensure that you carefully review all the documentation, including the policy terms, conditions and payment details. Make sure you understand how to file a claim if needed.
7. Maintain accurate records: This includes a copy of your insurance policy, payment receipts and any communication related to your insurance coverage in a secure and easily accessible location. Update your insurance information as needed and review your coverage periodically to ensure it remains adequate for your evolving therapy business.