Liability Insurance Terms to Know for Mental Health Professionals

Assault Upon You – covers expenses which mental health profesionals can incur from a bodily injury or damage to their personal property resulting from an assault while traveling to and from their place of employment

Assets – a resource with economic value, whether that be completely monetary, or a material resource

Biomedical Defense – coverage that protects against claims alleging bodily injury or damage arising from biomedical waste

Claims-Made – A claims-made policy covers claims only while the policy is active. Claims must be both made and reported to the insurance company during the policy period for coverage to apply. Tail coverage may be necessary to extend coverage for claims reported after the policy period ends.

Consent to Settle – A provision in the insurance policy that allows the insured to have a say in whether or not a claim is settled. This provision typically requires the insurer to obtain the insured’s consent before settling a claim.

Counselor or Psychologist Malpractice Insurance – used interchangeably with counselor or psychologist liability insurance, malpractice insurance is designed to protect mental health professionals from claims of negligence or improper treatment

Counselor or Psychologist Professional Liability Insurance – also known as malpractice insurance, provides financial and legal protection from injuries and damages to patients and or property

Damages Incurred – charges or punishment that a mental health professional is obligated to pay as a result of a malpractice dispute before professional insurance benefits are paid out

Deductibles – the amount of money a mental health professional must pay before the insurance company will finance a claim

Defense Costs – The expenses associated with defending against a malpractice claim, including legal fees, court costs, and expert witness fees. Defense costs are typically covered by the malpractice insurance policy, in addition to the policy’s limit of liability.

Deposition Fee Coverage – financial assistance for fees that result from a deposition that the insured mental health professional is required to attend

Employment Practices Liability – a type of liability insurance that covers wrongful acts arising from the employment process, including wrongful termination, discrimination, sexual harassment, and retaliation

Exclusions – Specific events, circumstances, locations or services that are not covered by the malpractice insurance policy. Exclusions may vary depending on the policy and insurer but typically include intentional acts, criminal acts, and certain types of professional misconduct.

Extended Reporting Period – also known as tail coverage, extends coverage for incidents that happened during the time you had your policy, but a claim was not filed until after the policy was expired or cancelled

Negligence – the failure to exercise care that is reasonably expected of a mental health professional

Occurrence – An occurrence policy covers claims for incidents that happened during the policy period, regardless of when the claim is filed. The coverage extends to any claim arising from an incident that occurred while the policy was in force, even if the policy has since expired or been canceled.

Premium – monthly or annual payment amount mental health professionals pay for malpractice insurance

Retroactive Date – The date from which coverage under a claims-made policy is retroactively applied. Claims-made policies typically have a retroactive date that states when claims begin to be covered in time by the policy, regardless of when the claim is reported.

Risk Management – the process of mitigating the chances of something going wrong

Sexual Misconduct Coverage – provides indemnity to insured mental health providers for improper sexual misconduct claims including assault, harassment, defamation, or improper handling of misconduct allegations

Subrogation – The legal right of the insurance company to pursue recovery from third parties who are responsible for causing a loss that the insurer has paid. Subrogation allows the insurer to recover the amount it has paid out in claims from the party at fault.

Tail Coverage – Also known as extended reporting period coverage, tail coverage provides protection for claims made after a claims-made policy has expired or been canceled. It allows the insured to report claims for incidents that occurred during the policy period but were not reported until after the policy expired.

Workplace/Premises Liability – protects landowners and tenants when someone gets hurt on their property due to dangerous conditions