Do I need malpractice insurance as a physical therapist employee?

Yes, even if you're an employee rather than a practice owner. While your employer likely carries coverage, it protects the business first and may not fully cover you in a lawsuit. Many employers now require physical therapists to carry their own professional liability insurance with at least $1 million per occurrence coverage. Individual policies cost around $667 annually and ensure you have dedicated legal representation if a patient files a malpractice claim against you personally.

What's the difference between occurrence and claims-made malpractice insurance?

Occurrence-based policies cover incidents that happen during your policy period forever, even if the claim comes years after you cancel. Claims-made policies only cover you if both the incident and the claim happen while your policy is active. If you switch carriers or retire with a claims-made policy, you'll need to purchase expensive tail coverage to protect against future claims for past work. Occurrence policies cost more initially but eliminate this concern.

How much does physical therapy business insurance actually cost?

For comprehensive coverage, expect to pay $1,500 to $3,000 annually for a small practice. This typically includes professional liability ($667), general liability ($446), workers' comp ($567 if you have employees), and a business owner's policy ($769). Larger practices with multiple therapists and locations can pay $5,000 to $15,000 per year. Your actual cost depends on revenue, number of employees, claims history, and services offered.

Does my physical therapy insurance cover telehealth services?

Not automatically. Many traditional professional liability policies were written before telehealth became common and may exclude or limit virtual care coverage. As telehealth expanded during 2020-2021, most insurers added telehealth coverage, but you need to verify this with your carrier. If you offer any virtual consultations, exercise instruction, or remote patient monitoring, confirm your policy explicitly covers these services and consider adding cyber liability insurance to protect patient data transmitted electronically.

Can I write off physical therapy insurance as a business expense?

Yes, all business insurance premiums are tax-deductible business expenses. This includes professional liability, general liability, workers' compensation, cyber liability, commercial auto, and business owner's policies. Keep detailed records of all premium payments and include them when calculating your business deductions. For sole proprietors, these deductions reduce your taxable income on Schedule C of your tax return.

What happens if I don't carry workers' compensation insurance?

Operating without required workers' comp is illegal in most states and carries serious consequences. You face state-imposed fines ranging from $1,000 to $100,000 depending on the jurisdiction and number of employees. If an employee gets injured, you're personally liable for all medical bills, lost wages, and potential disability payments. Some states classify lack of workers' comp coverage as a criminal offense punishable by jail time. Beyond legal consequences, you can't deduct employee wages as a business expense without proper workers' comp coverage.

Physical Therapy Insurance Checklist: Essential Coverage

Starting a physical therapy practice or working as an independent PT comes with a maze of insurance decisions. Miss a critical coverage, and you're looking at potential financial disaster from a single lawsuit. Buy too much insurance, and you're hemorrhaging cash on premiums you don't need. This checklist cuts through the confusion and shows you exactly what insurance your physical therapy business actually needs.

The reality is stark: the average malpractice lawsuit against a physical therapist costs over $134,000 to defend and settle. Without proper coverage, that comes straight from your pocket. But here's the good news—comprehensive protection doesn't have to break the bank. Most PT practices can secure essential coverage for under $2,000 annually.

Essential Coverage You Must Have

These aren't optional. If you're operating without these policies, you're gambling with everything you've built.

Professional Liability Insurance (Malpractice)

This is your first line of defense. Professional liability insurance protects you when a patient claims your treatment advice worsened their injury or that you provided inadequate care. Many states legally require it, and virtually every hospital or healthcare facility won't let you through the door without proof of coverage. Physical therapists typically pay around $667 per year for a policy with $1 million per occurrence and $3 million aggregate coverage. That's roughly $56 per month—less than most people spend on streaming services—to protect your entire career.

One critical decision: occurrence-based versus claims-made policies. An occurrence policy covers you forever for incidents that happen during your policy period, even if the claim comes years after you've cancelled. Claims-made policies only cover you if both the incident and the claim happen while your policy is active. Occurrence policies cost more upfront but eliminate the need for expensive tail coverage when you switch carriers or retire.

General Liability Insurance

Professional liability covers your treatment decisions. General liability covers everything else. A patient trips over your equipment and breaks their wrist. A client's purse gets stolen from your waiting room. Your receptionist accidentally publishes confidential information about a patient. General liability handles these third-party bodily injury and property damage claims. The average cost for physical therapy practices is $446 annually, and most commercial lease agreements won't let you sign without it.

Workers' Compensation Insurance

If you have employees—even just one receptionist or PT assistant—most states legally require workers' compensation coverage. This pays for medical bills and lost wages if an employee gets hurt on the job. For physical therapy practices, expect to pay around $567 annually. Skip this coverage and you're facing potential fines, lawsuits, and even criminal charges in some states. It's not worth the risk.

Optional Coverage Worth Considering

These policies aren't mandatory, but they address real risks that could sink your practice.

Business Owner's Policy (BOP)

A BOP bundles general liability insurance with commercial property coverage, protecting your equipment, furniture, and supplies from fire, theft, or storm damage. At around $769 annually, it typically costs less than buying these policies separately. If you own expensive equipment like therapeutic ultrasound machines, electrical stimulation units, or specialized exercise equipment, a BOP makes financial sense.

Cyber Liability Insurance

You store patient health records electronically. You process credit card payments. You send emails with protected health information. Any of these creates exposure to data breaches and cyberattacks. Cyber liability coverage pays for breach notification costs, credit monitoring for affected patients, legal fees, and regulatory fines. Healthcare data breaches are skyrocketing—the average cost of a healthcare data breach reached $10.93 million in 2023. If you store any patient data electronically, this coverage isn't optional anymore.

Commercial Auto Insurance

If your practice owns vehicles for home health visits or mobile therapy services, commercial auto insurance is mandatory in most states. Even if you use your personal vehicle for occasional business errands, your personal auto policy probably won't cover accidents that happen during business use. Commercial auto insurance fills that gap.

Employment Practices Liability Insurance (EPLI)

Once you hire employees, you face potential lawsuits for wrongful termination, discrimination, harassment, or wage disputes. EPLI covers legal defense costs and settlements. Consider this coverage essential once you have three or more employees—the risk becomes material at that point.

When to Add Each Coverage

Timing matters. Here's when to pull the trigger on each policy type.

Professional liability and general liability come first—before you see your first patient. Most state licensing boards, healthcare facilities, and commercial landlords require proof of both before you can start practicing. Get quotes at least 30 days before your planned opening to allow time for underwriting.

Workers' compensation kicks in the moment you hire your first employee. Don't wait until after they start—many states impose penalties from the first day an employee works without coverage. Add cyber liability as soon as you begin storing patient records electronically or accepting online payments. Add commercial auto before you or an employee drives for business purposes. Add EPLI when you reach three employees or when you make your first high-risk employment decision like terminating someone.

Annual Review Checklist

Your insurance needs change as your practice grows. Set a calendar reminder to review these items every year, ideally 60 days before your policy renewal date.

Revenue growth: If your annual revenue increased by 20% or more, your coverage limits might be inadequate. Staff changes: Added or lost employees? Update your workers' comp and consider EPLI if you crossed the three-employee threshold. Equipment purchases: Bought expensive new equipment? Increase your property coverage limits. Service expansion: Started offering new services like dry needling or manual therapy? Confirm your professional liability policy covers these specialties. Location changes: Moved offices or added a second location? Update your property insurance and notify all carriers. Claims history: Filed any claims this year? Expect premium increases and review whether higher deductibles might lower costs. State regulation changes: Check if your state modified insurance requirements for physical therapy practices.

How to Get Started

Start by getting quotes for professional liability and general liability insurance from at least three carriers. The American Physical Therapy Association (APTA) offers endorsed insurance programs through HPSO, which many PTs use for competitive rates and PT-specific coverage. Compare policies carefully—the cheapest premium isn't always the best value. Look at coverage limits, exclusions, deductibles, and whether the policy is occurrence-based or claims-made.

Once you've secured essential coverage, work with an insurance broker who specializes in healthcare practices. They can package your policies for potential discounts and help you identify coverage gaps. Most importantly, they'll advocate for you if you ever need to file a claim. The right insurance checklist protects more than your practice—it protects your peace of mind. Check these boxes before you treat your first patient, and you'll sleep better knowing you're covered when things go wrong.

Physical Therapy Insurance Checklist

Key Takeaways