Professionals looking at insurance documentTherapists face numerous ethical conundrums each day—when to warn a third party of a potential threat, what level of suspicion warrants a report to child protective services, and how to manage clients at risk of suicide.

Many of these challenges also present legal hurdles. A therapist who fails to meet the standard of care may be legally liable for that failure if the client suffers specific harm. For example, a therapist who did not adequately treat a credible threat of suicide might face a lawsuit from a client who suffers serious injuries in a suicide attempt.

While good therapists endeavor to protect their clients and avoid lapses in judgment, therapists are human beings who can and will make mistakes. Malpractice insurance protects you and your business if you are sued. It is a type of professional liability insurance, but it may not cover all lawsuits.

Malpractice Lawsuit Statistics and Information

The risk of facing a malpractice lawsuit depends on the type of clients a therapist treats, their location, and many other factors. The legal climate in some states is more favorable to malpractice claims than in others. High-risk clients are likewise more likely to expose a therapist to malpractice claims. For example, a therapist who treats people with a history of violence or who works with large numbers of people who engage in self-harm is more likely to make decisions that directly affect the safety of clients and the general public.

The American Psychological Association (APA) reports that about 2% of psychologists will face a malpractice suit at some point. Many more may be threatened with such a suit. Forty percent must answer state licensing board complaints.

You can be sued for any professional decision that harms a client. Some examples of behavior that might give rise to a malpractice lawsuit include:

  • Having sex with a client, even if the sex is consensual.
  • Failing to report child abuse.
  • Neglecting the duty to warn. Several therapists have been sued when their clients committed violent acts. For example, the psychiatrist who treated James Holmes, who shot several people in an Aurora, Colorado, movie theater, was sued.
  • Failing to protect a client from themselves, such as when a client makes a credible threat of suicide and the therapist does not intervene.

The overwhelming majority of therapists would never deliberately harm a client, such as by having sex with them. However, many decisions therapists make are subjective. When, for example, is the exact moment discussion of suicide becomes a credible threat? Distraction, stress, and other factors may cause a therapist to make the wrong call. A therapist who has too many clients, who misses an important phone call, or who suffers a trauma in their own life may not notice signs of danger or distress.

Clients can sue for any reason at all. It is then up to the courts to sort it out. So even if you make the right decision, you could face a lawsuit if a client gets hurt. Even if the lawsuit is completely frivolous, it takes time, money, and legal expertise to get it dismissed.

In 2014, the average mental health malpractice lawsuit cost $46,921.

What Malpractice Insurance Offers

Malpractice coverage offers extensive protection if you are sued. Every policy is different, but in general you will get:

  • Legal help. Your insurer will make sure you are represented by a lawyer who understands malpractice laws in your state. This ensures a zealous defense and increases the likelihood that a frivolous lawsuit will promptly be dismissed.
  • Interventions to prevent lawsuits. If a client threatens a lawsuit, your insurer may intervene before the suit is filed. They can send letters on your behalf and begin devising a strategy to protect you and your practice.
  • Payment for the cost of lawsuits. You’ll be covered up to the policy limits for any lawsuits that fall within your policy, meaning you don’t have to worry about a settlement or jury verdict bankrupting you or your practice.

The benefits of malpractice insurance include:

  • Less time spent worrying about lawsuits. When you have coverage, you know you’re protected if you make a mistake or a client makes an unfair threat.
  • The security that comes from having a good lawyer. If you’re sued, it’s hard to know whom to hire. Malpractice insurers select an exceptional lawyer on your behalf.
  • Financial security. You won’t have to worry about a lawsuit bankrupting your practice. Lawyers can be expensive and typically charge several hundred dollars an hour. Litigating a malpractice lawsuit typically demands hundreds, or even thousands, of hours of work. Even if you win, you could suffer significant financial losses if you pay for your lawyer yourself.
  • Help with licensing board complaints. Many malpractice insurers will also represent you before licensing boards.

What You Need to Know About Professional Liability Insurance for Counselors

Professional liability insurance is insurance that protects against lawsuits by providing you with a lawyer and funding the costs of the suit. Therapist malpractice insurance is one type of professional liability insurance, but it is not the only type. You may still need a general liability policy that covers other risks of doing business. A general professional liability policy may cover injuries you or a client sustain at your practice, including medical bills, lawsuits, replacing property, and other expenses. Malpractice coverage only covers malpractice—not other injuries. You should review the policy documents of your insurance policy so you know what’s included and what’s not.

Costs of Malpractice Insurance

The cost of malpractice insurance depends on several factors, including:

  • The insurer’s assessment of how high-risk your practice is. If you treat high-risk clients, your premiums may be higher.
  • The amount of coverage you seek. Higher policy limits and lower deductibles typically mean higher premiums. If you run a high-risk practice, these higher premiums may be worth it.
  • How many years of experience you have.
  • Whether or not you have been sued or faced a licensing board complaint before.
  • The state in which you practice. Some states have more favorable legal climates than others.

For a general liability policy that includes malpractice insurance and that has a $1 million claim limit, therapists can expect to pay between $350 to $1,750 in annual premiums. Malpractice-only policies are slightly less.

How to Sign Up for Malpractice Insurance

Numerous insurers offer malpractice coverage. You may also be able to get discounted coverage through a professional organization such as the APA or a local organization. Signing up is easy and usually just requires filling out a form and providing some information about your practice.

The real challenge is often determining what type of coverage you need. Spend some time researching the specific types of issues you treat so you have a keen understanding of your level of exposure and the types of lawsuits you might face. Then review several policies to compare price, coverage limits, deductibles, and other factors so you know exactly what you’re getting.

The best strategy for managing malpractice is to avoid it entirely. GoodTherapy offers numerous resources to help therapists become more effective advocates for their clients and reduce their risk of malpractice. To gain access to our myriad resources, become a member today!


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