What should occupational therapists know about professional liability insurance?

Professional liability insurance (PLI), often referred to as malpractice insurance, provides essential financial protection for occupational therapists (OTs) against claims of negligence, errors, or omissions in their professional services.

The need for professional liability insurance arises from the increasing frequency of lawsuits within healthcare, with claims against providers growing by about 3% annually according to some studies.

Occupational therapists may be at risk for allegations even in situations where no actual negligence occurs, highlighting the necessity for PLI to cover legal defense costs and potential settlements.

Coverage options can vary widely from one insurer to another, including aspects such as legal defense costs, settlements, and court costs, which can become substantial without adequate protection.

Some policies also provide coverage for teletherapy services, which have gained popularity, affirming the importance of understanding what is included under a given insurance policy.

Under HIPAA regulations, OTs must ensure that they maintain patient confidentiality, and breaches can lead to severe fines and lawsuits; professional liability insurance can mitigate these financial risks.

Many states require OTs to carry liability insurance as a condition for maintaining their licensure, making it not just advisable but a regulatory requirement for practice in those areas.

It's essential to consider the coverage limits when selecting professional liability insurance; many insurers recommend a minimum of $1 million per claim and $3 million in aggregate coverage to adequately protect against potential claims.

The scope of coverage provided by PLI can include not just direct claims from clients but also indirect claims arising from the actions of employees or volunteers working under the occupational therapist’s supervision.

The average cost of professional liability insurance for OTs can vary, typically ranging from $300 to $1,000 annually, depending on factors such as location, experience level, and the specific coverage selected.

Some insurance carriers offer group policies for practices employing multiple therapists, which can provide more cost-effective rates and comprehensive coverage for the entire practice.

OTs must inform their insurers of any changes in practice scope, such as adding telehealth services or specialized treatments, as this can affect coverage eligibility and terms.

Professional liability insurance is distinct from general liability insurance, which typically covers physical injury and property damage, thus emphasizing the need for OTs to secure both types of insurance.

Having professional liability insurance can also enhance an OT’s credibility and reassure clients about their professional practices, which can be crucial in maintaining a solid client base.

In today’s litigious environment, PLI can assist in managing the financial risk of malpractice claims, which can average between $30,000 to $50,000 for defense costs alone, regardless of the case's outcome.

Some professional liability insurance policies include risk management resources, like access to webinars and legal advice, that help OTs navigate their professional responsibilities better.

There are different types of professional liability insurance based on the practice setting, such as individual policies for sole practitioners or group policies for larger practices, reflecting the necessary adjustments based on practice dynamics.

Emerging technologies in rehabilitation and therapy can involve new risks, making it vital for occupational therapists to stay updated on their insurance policies to avoid coverage gaps.

OTs providing services across state lines must ensure compliance with varying insurance and liability regulations, as different states may have unique requirements affecting coverage validity.

As of 2025, the options for obtaining professional liability insurance have increasingly moved online, allowing education and applications processes to be more streamlined, enhancing accessibility for therapists looking for coverage options.