Although complementary therapists need business insurance in the same way that every other business does, their insurance needs are slightly different due to the unique nature of their profession. This is because complementary therapists face the risk of a professional negligence claim being made against them.
A standard business insurance package policy will not cover any compensation claims that are made against a complementary therapist if those claims arise out of professional negligence. This would leave a complementary therapist with a large uninsured exposure.
For this reason, it’s important that complementary therapists obtain malpractice insurance in addition to making sure that they have liability insurance, insurance to cover their business property, legal expenses insurance to cover any unexpected legal bills as a result of them becoming involved in legal action, and personal accident and sickness insurance to protect their income if they are unable to work because they have become injured or fallen ill.
What malpractice insurance covers
Malpractice insurance is a type of liability insurance that falls into the category of what’s called professional liability insurance. Unlike standard liability insurance, professional liability insurance covers you against compensation claims that have been made against you by someone who alleges that you have been professionally negligent.
They could have been injured or their condition could have been made worse because you misdiagnosed their condition and gave them the wrong therapy. They could have lost wages because they were unable to work as a result of your professional negligence.
Some malpractice compensation claims can be exceptionally expensive to settle, particularly where the malpractice results in something from which the injured party will never fully recover. Claims in excess of £100,000 are not unheard of.
Legal help with claims
As well as covering any compensation awarded, malpractice insurance also covers the legal costs that are incurred to defend a claim and any associated expenses.
However, more importantly, the malpractice insurer will have a legally trained team and access to solicitors that specialise in dealing with malpractice claims. This is important because malpractice claims often involve complex legal arguments.
Claims made basis
Malpractice insurance is usually on a claims-made basis. Unlike other types of insurance that cover unexpected losses that occur during the policy period, policies on a claims-made basis cover claims made during the policy period, even if the malpractice leading to the claim occurred before the insurance policy was taken out.
This presents two problems:
- The retroactive date
- Run-off cover
Most policies that are on a claims-made basis contain a retroactive date. Even if a compensation claim is made within the policy period, it will only be covered if the malpractice leading to the claim occurred after the retroactive date.
This is a problem because some compensation claims can be made years, and sometimes even decades, after the malpractice occurred. To address this, you should make sure that the retroactive date covers previous work that you have done.
Because malpractice insurance only covers claims made against you during the policy period, you should not assume that you can simply cancel your malpractice insurance or let it lapse at renewal when you cease trading or retire because there’s still a risk that a compensation claim will be made against you at some point in the future as a result of something that you have done in the past.
Some malpractice insurers will allow you to buy run-off cover for a one-off fee or a smaller annual premium if you cease trading or retire. This covers any future compensation claims made against you that arise from malpractice which occurred before the run-off cover was purchased.