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What’s malpractice insurance and why is it different to professional indemnity & public liability?

28/09/2018

Dangerous assumptions

Let’s start with a quick game of word association. What word do you think of when you hear ‘malpractice’? Probably: ‘medical’ – alongside a mental image of a doctor with a stethoscope slung around their neck.

But you’d be wrong to assume it’s something only they should be worried about.

That’s because malpractice has a much wider reach than the medical profession alone. It’s an allegation that can be aimed at anyone offering services with the potential to inflict bodily or mental damage.

So, not just doctors ­– but hairdressers, beauticians, complementary therapists, personal trainers, yoga and Pilates teachers, and counsellors too. They all run the risk of unintentionally harming their clients.

Maybe a hair bleaching procedure goes seriously wrong, triggering a major allergic reaction. Perhaps a counselling client claims you heightened their mental stress instead of relieving it. Or a yoga asana too far causes a slipped disc.

In cases like these, a simple, heartfelt ‘sorry’ usually won’t cut it. Instead, a claim for compensation often follows – which means not only expensive legal fees but potentially eye-watering damages payments. Oh, and a whole heap of stress.

But I’ve got professional indemnity insurance….

Yes, and it’s worth its weight in gold in many situations. It protects you if someone says your professional services weren’t up to snuff and they suffered financial harm because of it.

But we’re not talking just about being out pocket here – we’re talking actual bodily injury and mental anguish allegedly caused directly by you. That’s the kind of suffering it can be difficult to put a price tag on.

Agreed, it occurred in the course of your normal work, so is intrinsically linked to your professional services. But professional indemnity (PI) insurance simply isn’t designed to cover physical or mental harm.

Instead, treatment (also known as 'medical') malpractice insurance picks up the baton if there’s a claim and pays all your legal expenses as well as any compensation you’re liable for. That’s crucial, because damages for more serious injuries can run into the £thousands.

Won’t my public liability pick up the tab?

No. Not if it’s a treatment, therapy or some sort of tuition that’s gone wrong.

Sure, public liability (PL) covers third-party injury, just like malpractice insurance does. But PL is concerned with haphazard accidents – like if a client trips over a loose floorboard and breaks a leg.

What public liability doesn’t do is help pick up the pieces if a client suffers bodily or mental harm in the course of you doing your job. That’s what treatment malpractice insurance is for.

It’s still a good idea to have PL though, especially if clients come to your premises, or you visit them at home. It protects you against mishaps – so if your treatment table collapses and your client gets hurt, you’re covered. Likewise, if you somehow ruin their living room carpet.

Anything else I need to know?

Yes. It’s important to understand that treatment malpractice insurance is a ‘claims made’ policy. That means you’re only covered for a claim if your insurance is active at two points:
1. when the treatment, therapy or tuition was given
2. when a claim is reported.

And because claims can take a while to surface (think: psychological trauma, insidious backache), you always need to be looking over your shoulder.

So, if you’re changing insurers, make certain to tell your new one that you’ve had treatment malpractice insurance before. That way they can backdate your new cover to the start date of your original policy and include your past work by adding ‘retroactive cover’.

Don’t get too complacent if you wind up your business, either. If you cancel your insurance, any claims that crawl out of the woodwork afterwards won’t be covered. A better bet is to convert to run-off cover, which insures you against claims from the past, but gradually reduces in cost.

Takeaways

A few things to remember here, then:

  1. Malpractice doesn’t have to be just medical.
  2. Professional indemnity and public liability don’t cover the same territory as treatment malpractice.
  3. For a claim to be covered, treatment malpractice needs to be live both when the work was done and when the claim is made.

Take all three on board and you’ll find a combination of good practice and the right insurance treatment means malpractice doesn’t have to be as big an issue for your business as it could be.

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