Professional liability insurance is designed to cover claims and legal actions that stem from alleged malpractice by a psychologist. The amount of professional liability insurance that you, as a practitioner, may need depends on a variety of factors, including your geographic area of practice, your specialty and the services you provide. If you serve on a managed care panel, be sure to carry at least the minimum amount of professional liability coverage required by your contract with the managed care entity.
There are different kinds of professional liability insurance. “Claims made” policies cover only claims filed during the policy period. “Occurrence” policies cover events occurring within the policy period even if claim is made later. Be sure to talk to with your insurance company about what you need to do to protect yourself if you are retiring or closing your practice and your policy does not cover complaints filed after your closing or retirement date.
Group practices present unique insurance considerations and require special coverage to ensure that each member of the group, as well as the entire group, is protected adequately. Liability policies for psychology group practices have historically required all members of the group to share an aggregate liability limit, i.e., if a claim was paid on behalf of any member of the group, it decreased the available coverage for all members. Some group policies, such as one offered by the APA Insurance Trust, provide every insured individual in a group with his or her own personal aggregate liability limit. The result is that each insured's protection is not diminished as a result of claims paid on behalf of a member of the group.