Do Occupational Therapists Need Malpractice Insurance? Blog | Do Occupational Therapists Need Malpractice Insurance?
Healthcare 04/07/21

Do Occupational Therapists Need Malpractice Insurance?

When you think about malpractice insurance, you probably conjure up images of doctors harming patients who wouldn’t dream of practicing without it. You may not think that occupational therapists (OTs), and other types of medical providers need malpractice insurance because you don’t hear about lawsuits against that profession very often. However, professional liability insurance is critical for all medical professionals, including OTs.

Do Occupational Therapists Need Malpractice Insurance?

Whether you’re working for an employer or for yourself, OTs have direct contact with patients, which means you are putting yourself at risk of lawsuits, even if that risk is lower than it is for others in medical professions. Working for an employer likely provides you with some protection under your employer’s policy, but it may not be enough to fully cover you, or you could be found separately liable from your employer, which would leave you fully exposed.

Another benefit to having your own malpractice insurance policy is that you are in control of your defense. If you’re a defendant under an employer’s policy, they may decide to settle, which means you have decided to settle, even if you believe you could win a lawsuit because you believe you weren’t at fault. If you have your own protection, you have more control in what happens in your case.

Without a doubt, if you are self-employed as an OT, you must get malpractice insurance to protect your business as well as your career. Moreover, many states require medical providers of any type to carry liability insurance to mitigate any financial damages you’re ordered to pay in the event a lawsuit is filed against you and won. So, before you go without, which is not advised, be sure to check the laws in your area for the requirements.

Reasons Why OTs Need Malpractice Insurance

The main reason an OT needs malpractice insurance is that they’re working with patients who need medical care and are often relearning basic motor skills such as walking and taking care of themselves. This means they are at a higher risk of an injury or illness even if they are given the best care possible. When someone gets injured or falls ill while under the care of a medical professional, loved ones often need someone to blame, and that person may be you, whether you’re actually at fault or not.

A malpractice insurance policy will cover your legal defense if you choose to fight the claim. If you choose to settle or if you fight the claim and lose, the policy will cover the settlement or award, up to the maximum allowed by your policy. This protection frees you up financially so that you are better able to focus on other aspects of your life, including your job, as your claim makes its way through the legal system.

Risks That OTs Face

There are many risks that OTs face when they’re working with patients, but the biggest risk is that a patient’s condition doesn’t improve or actually worsens under an OT’s care. People have the belief that seeing a medical professional and following their guidance will improve their condition. While this is a reasonable assumption, it doesn’t always work out that way. Despite your best efforts, training, and education, sometimes treatments don’t work, which is upsetting for both you and the patient. Not to mention that the role and purview of OTs is expanding. There could be new risks that seasoned OTs are unaware of even if they have been practicing for years.

You also run the risk of a treatment injuring a patient if they have been misdiagnosed or the treatment plan isn’t appropriate for their condition. Even if you aren’t the doctor who diagnosed the patient, you could still be held liable for the treatment aspect of the claim. Other risks include patients falling at your facility while under your care and your employees getting into motor vehicle accidents driving to and from a patient’s home, among other perils.

Types of Liability Insurance for OTs

Professional Liability

This type of malpractice insurance protects you as an individual from a lawsuit that attempts to hold you legally responsible for either a mistake or omission in the care of a patient that led to injury, illness, or other loss. This is the type of policy all occupational therapists should have, whether you are an employee, work for an agency, work for yourself or own a practice.

Claims-Made Policy

This is a type of professional liability policy that’s in force for a specific time period and will cover claims that are filed against you during that period. For example, if you purchase a policy on January 1, 2021, and it’s in force until December 31, 2021, any claim that occurs between January 1 and December 31 will be covered. However, if you do not renew the policy, and a claim is filed on February 1, 2022, that claim will be denied, even if the incident occurred during the policy period. Insureds can (and are encouraged to) report incidents during the policy period. This means if you think something happened or there is a verbal threat of a lawsuit, you can report it prior to when a lawsuit is filed. It is strongly suggested to file a report in most cases so that your claim will be covered, even if filed later. The other advantage to reporting an incident is that you can receive legal advice on ways to alleviate the situation, before a lawsuit is filed.

Occurrence Policy

In contrast to the claims-made policy, the occurrence policy will cover any future claims that may come up after the policy has lapsed due to your retirement or other factors up to the limits of your policy. For instance, if you purchase a policy on January 1, 2021 and you retire on December 31, 2021, but a claim comes in on February 1, 2022, that claim will be covered up to your plan’s maximum payouts. The incident would have to have happened during your policy period, but the claim could be filed later.

Tail Coverage

Tail coverage is designed for medical professionals who choose a claims-made policy but want to extend the time to report after they quit practicing. It consists of an additional fee that will cover any claims that might arise after you leave the field and will need to be paid as a premium until you no longer want the tail coverage. You should keep the tail coverage in force until you’re nearly certain no other claims will arise. NOW Insurance offers 1, 2 or 3 year tail options to extended your reporting period beyond the policy period.

General Liability

General Liability ensures the business is protected against legal claims for bodily injury, property damage, and personal injury. Most companies have some sort of general liability policy, but it’s especially important for healthcare professionals, who tend to face more liability claims than typical businesses because they are in direct contact with patients on a constant basis.

The basic rule of thumb is that if you are an OT who works for an employer, you’ll want a professional liability policy because the company you work for will have a general liability policy. If you’re a self-employed OT or an independent contractor, you should have both a professional and general liability policy to cover lawsuits that target you as an individual and lawsuits that target your business. Some lawsuits may target both you and your business, so having both policies is critical.

Cyber Liability Insurance

If you’re working for yourself, you’re going to be handling patient data, payment information, and other sensitive material, which means you’ll need technology tools to make the processes more efficient. As wonderful as technology can be, it can also leave you vulnerable to cyber-attacks. It’s advisable for you to add cyber liability coverage to protect your business against cyber-crimes and data breaches.

Cost of Malpractice Insurance for OTs

The price you’ll pay in premiums for OT malpractice insurance depends on a variety of factors, such as where you live and how much coverage you need, and, in some cases, your previous claims history. The cost of general liability insurance will depend on the number of employees you have, the size of your payroll, and the experience level of you and your OTs. The more experienced your workforce is, the less risk you are to patients.

Claims-made policies are generally less expensive than occurrence policies because the insurance company is taking on additional risk with the occurrence policy in that it doesn’t end on a specific date. Since medical injuries and illnesses can sometimes be traced back to treatment years prior to a diagnosis, there is always the possibility of a lawsuit even after you stop practicing.

NOW Insurance provides claims-made policies, with options to add on tail insurance. An occupational therapist can expect to pay just $5-$10 per month for a professional liability policy that covers their needs.

Recommended Liability Insurance Limits for OTs

The minimum amount of professional liability insurance an OT should have is $1,000,000 per occurrence. Most companies allow you to increase your limits to at least $3,000,000 per occurrence, but usually, the higher limit is not necessary for OTs. Your policy should include coverage for legal representation, HIPAA fines and penalties, licensing board reimbursement, deposition expense, wage loss, First Aid reimbursement, medical payment, and first-party assault. You may also want to add sexual abuse or assault coverage as well.

Does Having Liability Insurance Increase the Risk of a Lawsuit?

The answer to this question is definitely no. Nearly all medical professionals these days have liability insurance given the culture of lawsuits that has risen in the past few decades. Usually, the injured party’s attorney will name everyone involved in the patient’s care as defendants in a lawsuit, so you’re at risk of a lawsuit even if you do nothing wrong. Remember that liability insurance is not only for settlements; it’s also meant to pay for your defense.

There is no way of knowing which medical professionals have liability insurance and which ones don’t. No public registries exist that would divulge private insurance policy information to patients or lawyers looking to sue an OT just for a payout. You’re far better off getting a liability insurance policy to protect your interests than not doing it because you fear someone will sue you. Chances are, if you’re in patient care for long enough, you’ll face some legal challenges.

Odds of an OT Getting Sued

As mentioned above, all medical providers are at higher risk of lawsuits than most other occupations, so as an OT, your risk would be higher than other professions. You don’t want to run the risk of going without insurance. It just isn’t worth it, especially since you could lose your business or career with a single malpractice lawsuit. Insurance will allow you to practice your career without the threat of someone filing a lawsuit over something you can’t control.

When you first enter the medical field as an OT, the last thing on your mind is getting sued. After all, your goal is to help people get better. However, you never can tell when a situation is going to go bad and result in a lawsuit.

Your insurance provider can consult you on how much insurance to get based on your risk. NOW Insurance can help you protect yourself from the financial impact of malpractice lawsuits. We provide insurance that is simple, fast and affordable.

Learn more about professional liability for occupational therapists and get an immediate quote today from simple online application in under 3 minutes.

If you are in business for yourself, take our free cyber risk assessment to determine your practice’s risk for a cyber breach. Get a cyber quote in just minutes to see how affordable it can be to have peace of mind that you won’t become a healthcare sector statistic in regard to cyber attacks.

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