I’m A New Practitioner…
What Do I Do About My Insurance?
First, we want to recognize that the social work profession is truly a noble one —founded on service, integrity, and clinical expertise. At times, it can be both stressful and dangerous. The nation is grateful for what you do. AND SO ARE WE! Thank You!
Buy It!
When you begin in your career, there is no doubt that you are deluged with many issues and challenges. High on the list of “to-do’s” is how to handle your liability risk. Risk mitigation requires a professional liability insurance policy. Even though not all states require a professional liability insurance policy as a prerequisite for obtaining a state license to practice social work, you should absolutely buy coverage. Liability insurance requirements, if any, and the actual amount of coverage required differ among states. You need to confirm the specific insurance requirements with your state’s licensing or regulatory board.
Most employers recognize liability risks and either provide some liability coverage or require you to have a liability insurance policy if you are an independent contractor. Be aware that if you are an employee, your employer’s liability coverage may not cover you as comprehensively as your own professional liability policy. Literature suggests that healthcare networks, hospitals, and social service agencies often set minimum professional liability limits at $1 million per occurrence and $3 million in aggregate for their social worker contractors.
Professional liability insurance is the first risk element to consider in your practice because it is directly tied to the services your provide. Second, consider purchasing a general liability insurance policy if you have an office or if you hold therapy or training sessions in public or private venues. Slip-and-fall incidents are among the most common claims covered by general liability policies. Fire damage to third-party property caused by you and your office is among the most severe exposures, so when evaluating general liability policies, examine the per-fire incident limit. If you practice in an employer’s office environment, you probably do not need a general liability policy.
Third, consider purchasing a cyber liability insurance policy that covers third-party records breach. Congressional Act 45 CFR Part 160 (HIPAA/HITECH) holds social workers civilly and criminally liable for client-record breaches by third parties, such as movers handling paper files or database network providers. This law is focused on records and information disclosure breaches — not financial loss from cyber theft. Your professional liability policy should already cover you for HIPAA breaches of client records for which you, as the first party defined in the insurance policy, are directly responsible.
Pro-Tip
A professional liability insurance policy is the essential first purchase in your new practice or when you begin work as a contractor or employee. If you are cost-sensitive, consider a claims-made policy.
Professional liability insurance policies come in two basic forms: claims-made and occurrence. Coverage is essentially identical, but there are two significant differences involving premium cost and “tail” or lifetime coverage.
A claims-made policy charges premiums that increase annually over a defined schedule—usually five to seven years. For example, the first-year premium may be $55, increasing each year until it reaches the level of an annual occurrence-policy premium.
This structure offers initial cost savings, but the downside is that if the claims-made policy terminates, any incident that occurred during the policy period but is not reported before the termination date is not covered unless you purchase a “tail” or extended reporting period. Tail coverage typically requires a one-time premium payment equal to one annual premium, though some carriers charge more depending on the tail term or may charge annual tail premiums.
An occurrence policy, by contrast, provides lifetime coverage—similar to general liability or auto insurance. When an occurrence policy terminates, all incidents that occurred while the policy was active remain covered, regardless of when the claim is reported.
Pro-Tip
Not all insurance agencies offer claims-made policies because commissions are lower and administrative work is the same. Some carriers charge a policy fee to help offset the claims-made discount.
So how do I shop for a professional liability policy?
We recommend checking out chat rooms, social media, and speaking with your colleagues—all of which are excellent reference sources. You will save money if you buy directly from the insurance carrier, rather than through an agency that charges policy fees and earns commissions incorporated into your premium.
After comparing premiums, fees, coverage, and exclusions, look beyond the policy details to assess what the carrier provides in addition to the coverage. For example, does the carrier offer the following—like Preferra?
- A Help Line for practice questions and claims assistance
- A learning suite to help you earn CEUs and gain practice insight
- A dividend program that pays you cash every year
- A comprehensive suite of generous policy benefits at a low price
- A free job board for employment and contracting opportunities
- A voice as an owner in insurance company officer elections
- Strong social worker representation on underwriting and claims committees
- A robust reinsurance panel and a strong AM Best rating
- No Wall Street pressure for profit growth above all else
The decision to buy a professional liability insurance policy is critical—and just as important is the insurance carrier you choose. Preferra’s experience in defending policyholder lawsuits above $100,000 averages over $225,000 per claim upon final adjudication. Choosing a Professional Liability policy from Preferra provides true peace of mind.
