Professional liability insurance: Should you carry your own policy?

From the NPAC By Cortney Mospan, PharmD, BCACP, BCGP

A question I frequently get asked from student pharmacists and my fellow New Practitioners alike is “Should I carry my own liability insurance?” In this article, I will highlight areas where professional liability is necessary, and the pros and cons of carrying it.

Practice environments that warrant your own policy
The need to carry your own policy is heavily influenced by the setting in which you work. The more independent you practice as a pharmacist, the higher your risk will be if you don’t have your own policy. The general advice from lawyer and pharmacist administrators is that all community pharmacists should carry their own policy because they work completely independently.  

Further, pharmacists performing any type of consulting work (i.e., chart reviews) and medication management roles (e.g., ambulatory care pharmacist, collaborative practice in community pharmacies) should have their own policy. Something pharmacists must be particularly mindful of is the changing practice model where pharmacists are independently initiating drug therapy.

I feel all pharmacists must have their own policy if they are independently prescribing, and they need to have a detailed conversation with their liability provider to explain their work and ensure that the policy covers their activities (including immunizations). Expanding roles and responsibilities may come with greater liability insurance needs and thus, greater premiums. Pharmacists who are practicing in the hospital setting, especially those who are part of an interprofessional team, likely have the least need for their own policy if they are not making individual notes, interventions, etc.

Pharmacists involved in dispensing roles are the most at need for liability insurance policies to protect against medication errors, but I have seen differing opinions about whether or not those in the hospital dispensing role should carry their own policy.

Anytime a pharmacist is self-employed, completing contract work, or volunteering, they must carry their own policy. Employer policies will not cover volunteering or contract work, and pharmacists starting PRN work should ask if they are covered by the institution. Another area in which I strongly recommend personal liability insurance is for pharmacists who are involved in academia, or other educational ventures. Many professional liability policies have opt-in policies to protect pharmacists if they misstate something in their notes, lecture, etc., for a fairly minimal increase in premium. But you must ensure you add this to your policy, as it is not standard.

Risks of having your own policy
There may be some risks associated with your own policy, according to the lawyer who taught a course focusing on legal and financial aspects of health care administration as part of my MBA program. She felt that if you carry your own policy and practice in a hospital setting, you may open yourself to a greater likelihood of being sued because the prosecuting attorney will look at all of the assets of those involved, and carrying your own policy will increase potential award.

However, according to the legal doctrine Respondeat Superior, the employer has strict liability for the acts of subordinates. While the pharmacist may be named in the suit, the ultimate target the attorney will go after is the employer.

Risks of not having your own policy
Sometimes, patients may file complaints through the board of pharmacy instead of filing suits for monetary awards. Legal counsel would not be offered by the employer in this situation, and liability insurance would offer benefits for retention of personal counsel. You must confirm when shopping for a policy what is covered—you need to ensure it covers not only awards for the plaintiff, but lost wages, legal fees, and other legal expenses, as well. Even if you practice in a fairly dependent environment (i.e., hospital interprofessional team), I personally still advise to have an individual policy because the employer may state that you did not follow company policy or weren’t acting under the roles and responsibilities described in your job position when suit is filed against them.

Another important note is that your liability insurance will not cover you when you are acting outside of the scope of practice, performing activities that are not considered legal, or if you were to be under the influence of any illegal substance.

Make sure to check out the Healthcare Providers Service Organization, the APhA-sponsored professional liability insurance provider, for your own policy needs! APhA members receive discounted rates.

A note from APhA’s partner in financial education, Your Financial Pharmacist

By  Timothy Ulbrich, PharmD

Thank you, Cortney, for a very informative and practical personal finance piece for New Practitioners. Considering the ever-expanding scope of practice for pharmacists, how many pharmacists are participating in outreach activities beyond the walls of their employer, the relatively low cost of professional liability insurance and what would not be covered in a situation where an individual only had an employer provided policy, I highly encourage pharmacists to carry their own liability policy.

While paying monthly (or annual) premiums for insurance policies is not as exciting as paying down debt, saving for a home, or investing for the future, it is an important part of the “protection” part of a financial plan (along with life insurance, disability insurance, etc.) At Your Financial Pharmacist, we firmly believe that a pharmacist salary alone does not guarantee financial success. Rather, we believe that a pharmacist salary plus positive consistent behavior, putting in place appropriate income-protection measures, eliminating debt, and investing in your future, equals long-term financial success.

Timothy Ulbrich, PharmD, is the Founder of Your Financial Pharmacist (YFP). The mission of YFP is to empower a community of pharmacists and student pharmacists working to achieve financial freedom. In addition to authoring the blog and co-hosting the Your Financial Pharmacist Podcast, Tim is the co-author of Seven Figure Pharmacist: How to Maximize Your Income, Eliminate Debt, and Create Wealth (