Knead Protection

AMT’s preferred insurer, Fenton Green, covers some common queries and explains the fundamentals of professional indemnity insurance.

What does professional indemnity insurance cover me for?

Professional indemnity insurance, also known as professional liability insurance or errors and omissions insurance, protects professionals and businesses against claims arising from negligence, errors, or omissions in the course of providing professional services. It provides financial protection and legal defence in the event that a client or third party suffers financial losses as a result of your professional activities.

What does “claims made” mean?

Professional Indemnity policies are written on a claims made and notified basis. This means that your insurance policy only covers claims made while the policy is active. Even though you may have had insurance at the time you provided your client with the service, you may not be eligible to rely on the benefits of the insurance policy because you can only notify an insurer of claims during an active policy period or within an extended reporting period, as per the policy wording. Your insurance may not cover the business or a person after the policy expires, leaving you exposed if claims are made after the policy expiration date. Companies or individuals ceasing business still have exposure to claims being made after their business ceases, arising from their previous business activities. This means you are vulnerable if claims are made after the policy expiration date.

This is where runoff cover comes in …

What is runoff cover?

A runoff cover policy is designed to cover you against claims for work done while in practice but arising after you have ceased to practice. It is insurance against a future loss. Massage therapists should hold a runoff policy until the likelihood of claims no longer exists.

Things to consider when taking out a professional indemnity policy

  • Limit of Indemnity – You’ll need a minimum $2 million limit to be eligible as a provider with all private health funds.
  • Reinstatements – The policy should have at least one automatic reinstatement.
  • Excess or Deductible – This must be at a level that your business can confidently sustain as an uninsured loss.
  • Insured Persons – Must cover the acts of employees, directors and contractors of the company.
  • Legal Entity Name – Make sure your correct legal entity name is included on the policy. A legal entity name is the name of the entity that appears on all official documents or legal papers. It can be different to business names. If it’s a company, it will be the full company name including the proprietary limited. Examples of legal entities:
    • John Smith John Smith Massage Therapist
    • John Smith Massage Therapy Pty Ltd
    • John Smith & Peter Smith John and Peter Massage Therapy
  • Legal /Defence costs – Must be in addition to the minimum limit or level of cover, meaning you have $2,000,000 of compensation in the event of a claim, and legal and defence costs are paid in addition.
  • Covered Modalities – Make sure your insurer or broker understands all the modalities that you practice and can extend cover for these. It’s important that you clarify this with them to ensure there are no grey areas in the event of a claim. You’ll need to have some sort of formal training or hold qualifications to obtain cover for a modality.
  • Retroactive cover – Make sure you have unlimited retroactive date or a retroactive date that aligns with the date you started trading.
  • Run off cover – You should check with your current insurer to ascertain whether they offer runoff cover. In the event that you cease practising, you will have cover in place for past work performed while you were practising.

Professional indemnity claims do happen

When should I contact Fenton Green or my insurance broker?

You need to contact your insurer as soon as you become aware of a potential circumstance that may give rise to a claim. Your insurer will then provide you with advice on how to proceed.

What must occur for something to be considered a claim?

There must be a written demand received from your client regarding the loss they have suffered as a result of your treatment. You also need to notify your insurer if a complaint against you is made to the Health Care Complaint entity in your jurisdiction.

How to prevent professional indemnity insurance claims

  • Have appropriate documentation in place for all clients. This includes having clients fill out documentation when coming to visit, documenting their health history and noting any pre-existing health conditions or injuries. Keeping good file notes and client records is crucial. In the event of a professional indemnity claim, one of the first things the insurer will request is a copy of your client file and notes.
  • Know your mandate/scope and refer any difficult cases to an appropriate health care practitioner. Some professional indemnity claims arise when therapists provide treatments they are not fully confident to perform or don’t provide regularly. We recommend that, if a client requests a treatment and you are not fully confident in your skills (such as dry needling), that you decline this request and refer the client to another therapist that specialises in this area.
  • Review your client list regularly. If some of your clients develop complex injuries or conditions that are outside of your area of expertise, referral to a therapist more equipped to deal with their case is strongly advised.
  • Manage your obligations under the AMT code of practice and ethics. Regularly review the AMT Code to ensure you are following all your obligations. Always act professionally and ethically when treating clients to avoid any complaints.
  • Have appropriate insurance. We cannot stress how important it is to get good cover and have good advisors. Professional indemnity and public liability insurance is critical if you do find yourself faced with a claim or allegations from a client. It is one of the most stressful things any practitioner can go through so you need to have your insurer and your broker as partners. They will work with you throughout the duration of a claim: these are long tail events that can therefore take a protracted amount of time to resolve. It’s so important to have someone advocating for you in these extremely challenging circumstances.

Some real-world claims examples involving massage therapists

In periods of change and instability or difficult economic times there can be an increase in professional indemnity claims. We have seen an increase in complaints and claims since the advent of the COVID-19 pandemic. We see a number of claims on a weekly basis at Fenton Green.

Claims Example One

Summary of Matter

A client presented at the therapist’s clinic for a remedial massage. During the treatment the claimant heard his chest pop followed by immediate pain. The client suffered a fracture to their rib as a result of the treatment. The client was unable to attend his job as a carpenter for 8 weeks. They claimed loss of income of income and damages for $20,000. The claim was settled for $25,000 including legal costs. 

Issues Raised in Matter

The practitioner did not have accurate file notes of the treatment provided. The client did not complete a new client intake, noting pre-existing injuries. It was discovered during the litigation process that the client had broken their ribs in the past.

Claim Example Two

Summary of Matter

A therapist had a regular engagement to provide corporate relaxation massages to a business. The therapist brought their massage table and set up in the boardroom of the business. The therapist was performing a massage on a client when their massage table collapsed. The client suffered a dislocated shoulder and ligament damage as a result. They required surgery and time off work due to the injury. The claims costs associated with the matter were roughly $30,000 plus legal costs.

Issues Raised in Matter

The practitioner did not maintain their equipment. It’s important to make sure that business equipment is regularly updated.

Claim Example Three

Summary of Matter

A client presented at the therapist’s clinic for dry needling. During the session, the therapist used a needle close to the client’s lung cavity. The client suffered a pneumothorax (punctured lung) requiring urgent hospital care and has a number of complications as a result. The client claimed loss of income and medical costs of $45,000 including legal fees.

Issues Raised in Matter

The practitioner did not have the relevant experience in dry needling. They did not keep up to date with professional development in this area. There were also allegations that the infection control of the practitioner was adequate: the client suffered numerous infections following the incident.

Questions about professional indemnity insurance? Please contact Fenton Green.

Image credit: Nick Youngson

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