Here's something most physical therapists don't think about until it's too late: even the most skilled, careful practitioner can face a malpractice lawsuit. Maybe a patient's condition worsens despite your best efforts. Maybe someone claims you used too much force during manual therapy. Maybe a TENS unit malfunctions and causes a burn. The lawsuit might be completely without merit—but defending yourself can still cost over $100,000.
That's where malpractice insurance comes in. Also called professional liability insurance, it's designed specifically to protect physical therapists from the financial devastation of lawsuits, whether they're valid or not. For less than the cost of a monthly gym membership, you get coverage that can save your career and your personal assets.
What Malpractice Insurance Actually Covers
Physical therapy malpractice insurance provides a legal safety net and financial support when a patient or coworker files a lawsuit claiming your therapy actions caused harm or injury. The coverage kicks in for claims of professional negligence—essentially any allegation that you didn't meet the accepted standard of care for your profession.
This includes defense costs (attorney fees, court costs, expert witnesses) and settlements or judgments if you're found liable. The most common allegations against physical therapists involve improperly using equipment like hydrotherapy or TENS units, using overly aggressive manual techniques that worsen existing injuries, failing to properly monitor patient progress, overlooking medical contraindications, and performing treatments without adequate informed consent.
The injuries claimed in these lawsuits range from minor complications to serious harm—fractures, herniated discs, burns from electrical stimulation, muscle or ligament damage, and in severe cases, loss of limb function. Even when you did everything right, defending yourself requires expensive legal representation and expert testimony.
Claims-Made vs. Occurrence Policies: What You Need to Know
This is where malpractice insurance gets confusing, but it's critical to understand. There are two main types of policies: claims-made and occurrence.
A claims-made policy covers you for incidents that occurred while your policy was active AND claims that are filed while your policy is active. The catch? If you treat a patient in January, cancel your policy in June, and get sued in August for that January treatment, you're not covered. Claims-made policies typically have lower premiums, but they come with a major vulnerability when you switch jobs, retire, or change carriers.
That's where tail coverage comes in. Tail insurance (also called extended reporting coverage) protects you from claims filed after your claims-made policy ends for incidents that occurred while you were insured. Without it, you could be personally liable for claims worth thousands or even millions of dollars. Tail coverage can range from one year to unlimited duration, with most practitioners opting for unlimited coverage despite the higher cost—because malpractice claims can surface years after treatment.
An occurrence policy, by contrast, covers you indefinitely for any incident that happens during the policy period, regardless of when the claim is filed. If you had an occurrence policy in 2025 and get sued in 2030 for something that happened in 2025, you're covered—even if you haven't had that policy in years. Occurrence policies essentially include built-in tail coverage. They cost more upfront, but many physical therapists prefer them because they eliminate the tail coverage headache entirely.
How Much Does It Cost?
Good news: physical therapy malpractice insurance is surprisingly affordable. Individual practitioners typically pay between $300 and $1,500 per year, with the average running about $667 annually (roughly $56 per month). That's far less than what physicians pay—many doctors spend $10,000 to $100,000+ annually for similar coverage.
For that price, you typically get $1 million per occurrence and $3 million aggregate coverage—the industry standard and what most states and employers require. Larger facilities and group practices pay more, ranging from $800 to $15,000 annually depending on the number of practitioners, patient volume, and services offered.
Several factors affect your premium: your years of experience (newer grads typically pay slightly more), your practice setting (outpatient clinics vs. hospitals vs. home health), your geographic location, your claims history, and the types of treatments you provide. Specialty areas like sports medicine or manual therapy may cost more due to higher injury risk.
It's worth noting that insurance rates are rising across the healthcare industry. Malpractice premiums increased by 36.2% in 2022—the highest jump since 2005. That's up significantly from 13.7% increases in 2018. Even with these increases, physical therapy coverage remains relatively affordable compared to other healthcare professions.
Why You Need Your Own Policy (Even If Your Employer Has Coverage)
Many employed physical therapists assume they're covered under their employer's policy and don't need individual coverage. That's a dangerous assumption. Here's why: liability transfers directly to you as the individual providing care. You can be held personally responsible for claims even if your employer has insurance.
Your employer's policy protects the business first and foremost. If there's a conflict of interest between you and your employer, their insurance company represents the facility's interests, not yours. You may need your own attorney, which the employer's policy won't cover. Additionally, employer policies typically don't follow you when you leave. If you treated a patient while working for Employer A, then move to Employer B, and get sued two years later for that treatment at Employer A, neither policy may cover you.
Individual coverage also protects you outside your primary job—if you provide pro bono services, volunteer at community events, or offer advice to friends and family, your personal policy typically covers those situations while your employer's policy doesn't. Some states, like Pennsylvania, actually require physical therapists to maintain their own malpractice coverage with at least $1 million per occurrence as a licensing condition.
Important Policy Features to Look For
Beyond the basic coverage amount and claims-made versus occurrence decision, several policy features deserve your attention. Consent to settle clauses determine whether you or the insurance company has the final say on settlement offers. Some policies allow the insurer to settle without your permission, while others require your consent. If you want control over whether to settle or fight a claim, look for a policy that requires your approval.
Defense costs matter too. Some policies include defense costs within your coverage limit (called "inclusive" coverage), meaning legal fees reduce the amount available for settlements. Other policies provide defense costs in addition to your limit (called "exclusive" coverage), which is more valuable. If your policy limit is $1 million inclusive and you spend $200,000 on defense, you only have $800,000 left for a potential settlement or judgment.
Coverage for license defense is another valuable feature. If you face a licensing board complaint or investigation, legal representation can cost tens of thousands of dollars. Many malpractice policies include license defense coverage, typically with a separate sub-limit of $25,000 to $100,000. Finally, check what activities are covered—most policies cover your primary clinical work, but you'll want to verify coverage extends to telehealth, supervision of students or assistants, and any side activities like teaching or consulting.
Getting Started with Coverage
Shopping for malpractice insurance is straightforward. Start by checking with your professional association—the American Physical Therapy Association (APTA) offers a program powered by HPSO specifically for members. You can also get quotes from specialty insurers like CM&F Group, Healthcare Providers Service Organization (HPSO), and The Hartford, all of which focus on healthcare professional liability.
When comparing policies, don't just look at the premium. Compare the coverage type (claims-made vs. occurrence), policy limits, whether defense costs are included or excluded, consent to settle provisions, license defense coverage, and what happens when you change jobs or retire. Ask about discounts—many insurers offer reduced rates for newly licensed therapists, part-time practitioners, or those who complete risk management courses.
The bottom line: malpractice insurance is one of those things you hope you never need but will be desperately grateful for if you do. For less than $150 a month, you protect yourself from claims that could financially devastate you and your family. It's not a matter of whether you're a good clinician—lawsuits can happen to anyone, and the cost of defending yourself without insurance can exceed your annual salary. Get covered, understand your policy, and practice with confidence knowing you're protected.
