Yes, you need malpractice insurance: Here’s why, and how much it costs

Becoming a mental health professional and providing emotional support for patients is an admirable path. But it’s also a delicate one. The close interpersonal relationships you develop with your clients must be protected. 

Malpractice insurance protects healthcare providers when allegations of negligence, inadequate treatment, breaches of confidentiality (like violating Health Insurance Portability and Accountability Act or HIPAA rules), and personal injury are made. It can also help with costs associated with navigating the legal system if and when a claim is made. 

While it’s not always mandated at a state level, it’s a crucially important tool when setting up your own business or joining a practice to maintain the safety and peace of mind of your practice — both of which are necessary to provide clear, present, and quality care to your patients. 

Why do I need to know about malpractice insurance?

Professional liability insurance (aka malpractice insurance) is highly recommended for health professionals across the board, but especially for getting credentialed as a mental health professional. Providers who work with Grow Therapy, for example, must have individual professional liability insurance to work with clients or bill for services. 

Most crucially, it protects against claims of emotional harm, which is particularly relevant for therapists and other mental health professionals. And while malpractice requirements vary at a state level, most, if not all, employers and educational institutions (for professionals furthering their education) do require it.

In addition to lawsuits, licensing board complaints can also happen over the course of your career. In fact, some studies have indicated psychiatric practitioners (including psychiatrists and psychiatric nurse practitioners) may face administrative actions from licensing boards more frequently than other disciplines. With malpractice insurance, the burdens of the time and cost to handle those complaints are taken off of the practitioner, who can then, in turn, continue focusing all of their attention on doing their job and providing care. 

What types of malpractice insurances are there?

Mental health professionals typically choose between two types of coverage: Occurrence and claims-made. Occurrence insurance protects you in the long term against any incident that happens while the coverage is active, regardless of when a claim is actually reported. For example, if you had an active occurrence insurance policy in 2025 that you terminated at the end of that year, and then you were later sued for an incident that occurred in 2025, you’d still be covered — even though the policy is no longer active.

Meanwhile, a claims-made policy only protects you if the policy is active at the exact date of the incident occurring. Once a claims-made policy is terminated, it no longer protects you. In the example mentioned above, a claim made after you terminated your claims-made policy would not be covered. 

In addition to malpractice insurance, there are different types of insurance policies for different types of incidents. General liability, for instance, protects against more general claims, such as an in-office injury. Meanwhile, professional liability insurance protects the business side of your practice.

Malpractice insurance can be considered a type of professional liability insurance and the two terms are sometimes used interchangeably, but it focuses on protecting against claims regarding negligence, or allegations of causing emotional harm to a patient.

The type of insurance, as well as how much you choose to take out, depends on your specific needs and work environment. 

For example, providers who work with (or are planning to work with) clients via telehealth should ensure their malpractice insurance offers appropriate coverage. Especially since the height of the COVID-19 pandemic, and the resulting rise in telehealth usage, insurance companies have increasingly expanded telehealth-specific coverage. This can include options like “cyber” liability coverage to protect providers in the event of cyberattacks, computer viruses, or data breaches.

What does malpractice insurance cover? 

Malpractice insurance protects mental health professionals against legal issues that could arise in their work. That includes both legal protection, as well as financial protection in the event that a lawsuit arises. It also provides professional protection, meaning security for your job, and on a more granular level, it can protect against potential security breaches like having your computer systems hacked. 

Do I need malpractice insurance to work with Grow Therapy?

Yes. All Grow Therapy providers are required to have individual malpractice insurance, also known as individual professional liability insurance. Your name needs to be listed under “Named insured” on your Certificate of Insurance (COI) and you can easily submit your COI to provide proof of coverage. Grow Therapy works with CPH Insurance — however practitioners are encouraged to compare pricing plans to pick one that’s best for them. Check out Grow’s guidelines for minimum coverage requirements and other key information.

How much does malpractice insurance cost?

Malpractice insurance is actually quite cost-effective, especially considering the level of protection it offers to mental health professionals. Cost is determined by factors like your location (and how costly litigation is in your state).

As with other types of insurances, premiums can go up in conjunction with the number of past claims filed. Finally, the cost can also depend on the level of plan you choose, and whether or not you take on a base plan, or opt to include add-on features like cyber liability coverage or adding on additional employees. 

Do all mental health professionals pay the same amount? 

Costs associated with malpractice insurance can vary based on factors like your particular field, geographic location, and the amount of coverage. For example, general surgeons typically pay higher malpractice insurance premiums than those in the internal medicine field. Similarly, psychiatrists will typically have a larger premium since they can prescribe medicine and therefore are considered to be at a higher risk.

Licensed counselors and social workers, as well as marriage and family therapists, typically pay a lower amount. For students, interns, and residents, some insurance providers offer plans with discounted rates — though you should make sure to update your coverage as your status changes (e.g., completing a master’s program and moving into a post-master’s/intern under supervision phase). 

How do I know what level of coverage I need?

The best malpractice insurance for you, and the amount of coverage you need, depends on your own personal and practice risk. To join the Grow Therapy network, for example, your plan must generally cover at least $1 million per incident and $3 million aggregate. However, there are exceptions to those requirements, including nurse practitioners in California and Florida, who need at least $100,000 per incident and $300,000 aggregate.

Depending on your specific field (psychiatry versus social work, for example), as well as where you’re located and the population you’re working with, you might want to take out a higher level of coverage.

Choose appropriate liability limits 

Your need for coverage shifts considerably depending on whether or not you’re taking it on for just yourself, or if you need to cover employees or other people in your practice. If you are seeking coverage for more than just yourself, you may need to take out a larger plan than you would otherwise need. 

The $1-million-per-incident and $3-million-aggregate thresholds are common benchmarks to start with. If you work in person, you might also want to consider additional general liability coverage, which protects against personal injury and accidents. 

Coordinate coverage with your employer policy 

Depending on where you work, you might have professional liability insurance through your employer. However, it’s important that you fully understand the limits of that coverage, which may not cover you specifically, but rather the company itself. As an independent contractor joining a practice, you are responsible for taking on that coverage yourself. 

Consider board defense coverage 

While malpractice insurance protection against lawsuits is crucial, coverage in case of licensing board complaints can also be an important consideration. When a complaint is filed to the licensing board, it’s typically not about money — it’s about disciplinary action. It’s important to confirm that your malpractice insurance policy has this additional coverage included. 

Ultimately, the “right” amount of malpractice insurance should offer a cost that is feasible for you, coverage that you feel comfortable with for your own risk tolerance, and (most importantly) peace of mind. 

Where do I get malpractice insurance? 

Malpractice insurance is available through a variety of specialized providers. Grow Therapy works with CPH Insurance, but other options include HSPO and American Professional Agency, to name a few. Depending on if you are affiliated with any associations, you might also be eligible for discounts through that association. Be sure to ask insurance providers if they have a relationship with your organization.

How do I compare malpractice insurance policies? 

Take a look at a few different companies’ options, and compare their prices, along with coverage type. Perhaps you want to go with a company that includes telehealth coverage, or a more robust licensing board protection. Be sure to also keep an eye on coverage terms, which can vary depending on your plan — you might want to consider whether the plan is occurrence or claims-made, as well as how much your insurer will cover for a single claim. 

Types of coverage to consider when you’re choosing a plan:

• Telehealth coverage — does the plan cover you for claims made over a telehealth appointment or on the web?

• Licensing board protection — does the plan protect you against legal fees associated with licensing board complaints?

• Property damage coverage — does the plan protect against potential damage if and when you are assisting a patient in their home?

• Sexual misconduct protection — does the plan protect against accusations of sexual misconduct? 

Other considerations 

In addition to level of risk, there are other considerations when choosing how much malpractice insurance you need. You might want to connect with your employer to get a better understanding of their coverage levels — though just because your employer has liability insurance, does not mean that you do not also need a personal practitioner to protect yourself. 

Other options to consider include board defense, which is an add-on for insurance, and protects against the costs associated with having to defend your license to the board, as well as telehealth coverage, which has become more prevalent over the years.

Ultimately, the amount of coverage you need is the amount that will give you the confidence to do your best at the job you are trained to do. 

Final thoughts

Malpractice insurance, while not legally required, is highly recommended for all mental health professionals. Choosing the right plan for you comes down to the cost, the amount of liability you want to be covered for based on your specific field and risk assessment, and your risk tolerance in general. It’s a crucial tool to help you, as a mental health professional, feel free to run your practice and assist your clients with full peace of mind.