Why Nonprofit Organizations Need Counselor Professional Liability Insurance Coverage: Malpractice Insurance for Therapists
As a 501(c)(3) organization, your nonprofit is held to the same professional standards as for-profit businesses. This includes ensuring that your employees have the proper insurance coverage to protect them from risks associated with their work.
One of the most important types of insurance for nonprofits is counselor professional liability insurance, also known as malpractice insurance for therapists.
This type of coverage protects counselors and therapists working for nonprofits from being sued for alleged wrongful acts committed in the course of their work.
While your nonprofit organization may have general liability coverage, this will not protect individual counselors and therapists from being sued for alleged malpractice.
There are many different types of risks that counselors and therapists face, which is why it is so important for them to have their own professional liability insurance coverage.
What is Professional Liability Insurance?
Professional liability insurance, also known as “medical malpractice insurance,” is a form of insurance designed to protect healthcare professionals from potential malpractice claims. It provides financial protection against accusations of errors and negligence, as well as legal fees incurred to defend the professional against such claims.
Malpractice insurance for counselors may also cover lost data and HIPAA fines, as well as legal defense fees and compensation. It even covers claims made by past clients if continuous coverage has been maintained.
Professional liability insurance for counselors is an important form of protection for healthcare professionals, as it helps them retain their reputation and career while resolving any legal matters that arise.
What Additional Commercial Insurance is Needed for Mental Health Therapists?
1. Therapy Liability Insurance Coverage
The general liability insurance policy provides financial protection for individuals and counseling businesses at the business premises location. It provided bodily injury coverage that covers the costs of medical bills and property damage to property caused by the business entity. It is an essential form of protection for mental health therapists since accidents can happen and legal claims can be very costly.
One of our licensed church insurance agents can help your nonprofit obtain liability insurance quotes for your religious organization offering therapy and counseling services.
2. Professional liability insurance (E&O Insurance)
Malpractice insurance offers liability insurance protection for counseling professionals from financial losses due to errors, omissions, claims of negligence, or malpractice. These policies are written on a claims-made basis and cover legal expenses such as court costs and settlements if a patient were to sue the therapist (insured) for professional negligence. It also covers indemnity payments to the patient if they are successful in their lawsuit.
The traditional professional liability coverage offered to churches does not include counselor malpractice insurance protection for licensed therapy or counseling services. It’s essential to ensure your professional liability policy includes malpractice coverage related to professional counseling.
3. Coverage for Sexual Misconduct Liability
Sexual misconduct liability is a type of coverage needed for a therapy or counseling practice that provides protection against allegations of inappropriate sexual or romantic conduct. It covers legal defense costs, settlements, and other expenses. This coverage is important for any mental health therapist, as 15.9% of claims against counselors involve boundary violations and/or allegations of sexual misconduct.
Churches could face a lawsuit for the inappropriate behavior of their counselors and therapists and must obtain the needed insurance.
4. Umbrella Insurance Coverage
Umbrella insurance is an additional layer of liability protection that can extend coverage beyond the limits of multiple policies for health care providers and mental health therapists. It provides an extra layer of financial protection against catastrophic events, such as large legal judgments that may arise from a lawsuit or injury.
If a licensed therapist forgets to notify child protective services after receiving information that is deemed reportable and if injury or death results, an umbrella policy can provide an additional layer of insurance coverage.
5. Workers’ Compensation Insurance
Workers’ compensation insurance is necessary for mental health therapists working in the healthcare industry. This type of insurance provides financial protection in case of accidental injuries or illnesses that may occur while a therapist treats clients while on the job, and can also cover lost wages and lawsuit costs in case of a legal dispute.
6. Breach of Privacy: Cyber Suite Insurance Coverage
Mental health therapists need to safeguard confidential patient/client personal information by securing client data behind two layers of security and must be mindful of data protection regulations. Breach of privacy coverage is necessary to provide protection in the event of a data breach or cyber attack.
7. Workplace Employment Practice Liability Insurance Coverage (“EPLI”)
Mental health therapists’ offices should buy EPLI that includes third-party harassment liability misconduct of a client. This provides liability protection from both employer harassment and clients who may inappropriately harass a therapist or receptionist employed by the business.
9. Business Auto Insurance
As counselors travel to different offices to service clients it is critical to have business auto insurance in place to protect the business organization. Coverage should include non-owned and hired auto insurance coverage.
10. Group Health Benefits
To retain your staff of licensed therapists it is vital to provide group health benefits so they and their families can receive the needed health insurance coverage.
What Insurance Coverage is Included with Professional Liability For Licensed Therapists and Counselors?
Recommendations that cause harm to their clients.
A licensed therapist or counselor may cause harm to their clients by failing to report child abuse, neglecting the duty to warn of potential danger, or failing to protect a client from self-harm, such as when a client makes a credible threat of suicide and the therapist does not intervene.
Accusations of professional negligence to a client
When a licensed therapist or counselor is involved with a client and an accusation of professional negligence arises, professional liability insurance can provide coverage for legal defense costs, settlements, and other expenses related to the alleged error or oversight.
Therapeutic mistakes or oversights
No one is perfect and mistakes happen during counseling sessions. Professional liability insurance can cover a variety of therapeutic mistakes or oversights such as accusations of negligence or providing bad advice.
With the rise in telehealth services, businesses are facing new challenges with maintaining privacy as therapists are treating patients in their personal residences versus in an office setting. While healthcare providers are able to increase their responsiveness in treating clients this also allows for added mistakes to happen.
Defense insurance coverage
Professional liability insurance for licensed therapists and counselors is designed to protect them from malpractice lawsuits and other claims related to their professional services. Some policies may include a limited defense reimbursement limit while others provide unlimited defense cost coverage.
Top 10 Therapeutic Mistakes Caused by a Licensed Mental Health Therapist
1. Failure to Establish a Therapeutic Relationship
The therapeutic relationship between a licensed mental health therapist and a client is of paramount importance in order to ensure a safe, secure, and effective therapy session. Clients who don’t feel safe may present a liability risk to the therapist and business.
2. Inadequate Documentation
The impact of inadequate documentation by a licensed mental health therapist can be significant. Without proper documentation, a therapist can be sued for negligence. This could lead to a costly and lengthy legal battle, which could have a severe financial impact on the therapist.
3. Failure to Follow Guidelines
As a licensed mental health therapist, there are certain guidelines that must be followed to ensure the safety and well-being of both the client and the therapist. These guidelines include properly evaluating a client’s history, adequately documenting each session, staying up to date on the state’s standard of care, managing expectations, and establishing and maintaining professional boundaries. Failure to follow these guidelines can have dire consequences, such as facing a lawsuit from a client who may have suffered harm because of a therapist’s negligence.
4. Failure to Adequately Educate Themselves
Failure to adequately educate themselves can lead to therapeutic mistakes caused by a licensed mental health therapist. A lack of knowledge on certain topics, such as the latest treatment methods or ethical considerations, can result in erroneous advice given to clients that can lead to physical or psychological harm.
5. Failure to Follow Safety Procedures
It is vital for established safety procedures to be followed by licensed mental health therapists. These include some of the following:
- Understand the standard of care and the legal implications of not meeting that standard.
- Have a good understanding of the client’s situation and be prepared to act on any potential threats.
- Invest in malpractice insurance to have protection in case of a lawsuit.
- Work reasonable hours to avoid making decisions while exhausted.
- Stay informed on the latest medical treatments and medications.
- Before prescribing any medication, consider the potential side effects and the dosage that should be used.
- Maintain accurate records of the client’s progress and any changes in their condition.
- Monitor any clients with suicidal ideations closely and be prepared to take appropriate actions if necessary.
- Regularly consult with colleagues to keep informed and stay up-to-date on best practices.
6. Poor Communication Skills
Poor communication skills can refer to a therapist’s failure to listen to the client or respond to them in a timely manner. It also includes a lack of clarity in the conversations, leading to misunderstandings that can undermine the therapeutic process.
7. Misunderstanding Mental Health Disorders
Misunderstanding mental health disorders can lead to therapeutic mistakes by licensed mental health therapists. This can be caused by a lack of knowledge about the disorder being treated or a misunderstanding of the patient’s current condition. In such cases, it can be difficult for the therapist to make appropriate decisions which can lead to unintended consequences.
8. Failure to Maintain Professionalism
Professionalism is essential for any licensed mental health therapist. It allows them to create a safe and trusting environment with their clients, while also ensuring they are meeting the legal and ethical standards of care. Professionalism is an important part of the job that allows therapists to provide the highest level of care to their clients.
9. Inadequate Documentation of Treatment Decisions
Poor documentation can lead to confusion and misunderstanding on the part of the patient, resulting in mistrust. Inaccurate or incomplete documentation can also be used against the therapist in a lawsuit, as it may be difficult to prove that the therapist acted with due care and diligence. As part of insurance underwriting the church insurance company wants to know if licensed therapists are maintaining accurate and complete documentation.
10. Failure to Receive Continuing Education Courses
The impact of missing a required course on the career of a licensed mental health therapist can be quite severe. Without the necessary knowledge and skills, therapists can make mistakes that can lead to costly malpractice lawsuits. These lawsuits can lead to expensive legal fees and penalties, as well as potential loss of licensure.
An insurer who finds a business is not ensuring their therapist is not keeping up with continuing education, may cancel the insurance coverage making it difficult to buy.
Do Church Insurance Companies Cover Professional Liability insurance for Licensed Mental Health Counselors that Charge a Fee for Services?
Yes, many church insurance companies do cover professional liability insurance for licensed mental health counselors that charge a fee for services. Churches who offer paid counseling services, need to notify their insurance agent specializing in church insurance so they can add the needed insurance coverage to the church insurance program.
Why Pastors Should Not Provide Therapy Services Outside of Spiritual Counseling Services unless they are Licensed Marriage and Family Therapists?
Pastors should not provide therapy services outside of spiritual counseling services for several reasons.
- First and foremost, pastors are not considered to be mental health professionals and therefore do not have the same level of training, experience, or expertise in providing therapy services as a certified mental health professionals.
- Pastors may not have the necessary credentials required to provide therapy services and may lack the appropriate understanding of the range of mental health issues and proper treatment strategies.
- Pastors may face ethical and legal concerns when it comes to providing therapy services due to the vulnerability of their clients and the potential for breach of confidentiality.
Without the proper training to handle the complexities of mental health issues, they can easily make mistakes that could have serious consequences. Therefore, it is important for pastors to stay within the bounds of spiritual counseling services when providing services to their congregation.
What is the cost of Professional Liability Insurance Coverage?
The cost of Professional Liability Insurance coverage can vary based on factors such as the size and location of your practice, the limits you select, and the deductible you choose. The cost of coverage ranges from a few hundred dollars to several thousand dollars per year.
Integrity Now Insurance Brokers is an experienced church insurance agency that can help navigate the appropriate coverages to protect your nonprofit organization.
What is the difference between General Business Liability and Professional Liability Insurance Coverage?
General Business Liability covers third-party property damage, bodily injury, medical expenses, and legal defense costs while Professional Liability Insurance provides coverage for the professional advice provided to their clients. Both policies provide financial protection against accusations of errors and negligence, but it is important to understand the differences in order to determine which type of policy is best for your business.
How does Professional Liability Insurance Coverage protect mental health counselors from malpractice claims?
Malpractice Insurance policy protects mental health counselors from malpractice claims by providing financial protection against claims of negligence, errors, or omissions. It covers the cost of defending against a claim, as well as any damages awarded in a lawsuit.
How can I get Professional Liability Insurance Coverage for my Mental Health Counselor practice?
Counselor liability coverage is available in all states and is offered at an affordable price. The standard limit of liability is 1 million per claim. As your consultation practice increase you may want to increase the coverage to 2 million per claim.
Integrity Now Insurance Brokers can help you obtain your professional liability insurance coverage by comparing the policies offered by different insurance companies. We typically recommend bundling your liability and personal property insurance coverage with the counselor insurance policy as this will help keep the insurance cost lower.
If your house of worship needs malpractice insurance give us a call today.
