This is the first, in a two part “ Ask an Expert” series with Canyon Clifton about aesthetic injector malpractice insurance policies. Canyon Clifton is a specialist in the areas of Medical Malpractice Insurance, Professional Liability, General Liability, Oil & Gas & Specialty E&O Insurance. He is CEO of Clifton Insurance, which writes globally, and is able to capture all carriers to obtain multiple quotes in all areas. His main areas of specialty are Medical Spa-Day Spas, CRNAs, PAs, Birthing Centers, Midwives, Anesthesia Groups, Urgent Care Facilities, Law Firms and much more.
Canyon Clifton answered all my pressing insurance questions about aesthetics policies. He seems to have almost seen it all when it comes to policy claims. He has endless knowledge and patience with explaining the ins and outs of these insurance plans.
How to contact Clifton Insurance for injector malpractice insurance
Please find out more about him and Clifton Insurance by calling him directly at 877-212-4368 ext. 102 and more details on their site: https://www.cliftoninsuranceagency.com/medical-malpractice-insurance/medical-spa-malpractice-insurance/
Does my professional malpractice cover me to do aesthetics on the side?
I asked Canyon, “Does a typical professional malpractice plan someone has as a MD, NP, RN, etc. cover injector malpractice?” This is what he responded with:
“If you are a CRNA, or PA or a NP and you have an individual policy for medical malpractice insurance to cover you in your primary work, there is a reasonable chance that your current policy may cover you. Basic things like neurotoxins and dermal filler injections, which these providers are already trained to do, are more likely to be included in your professional malpractice coverage. But, you need to double check that with your current carrier and get it in writing.
A lot of policies are purchased online where it says they do cover aesthetics. However they it may not cover microderm abrasion, microneedling, and other procedures like that. Many policies cover forms of aesthetics, but may not necessarily cover all of them. We see that all of the time. A provider comes to us who has been practicing for 2 years doing botox and fillers and they want to add on microneedling or laser and their current carrier will not cover that. Just because the individual carrier or practitioner can get aesthetic based coverage, some procedures may be excluded from coverage.“
One point I will add to this, is we are talking about an individual injector malpractice policy a provider has taken out as an independent or 1099 contractor. If your malpractice is covered by your W2 employer, it is unlikely that it will cover any practice outside of that position.
Are there state minimums for how much coverage a provider needs?
Limit of liability is the maximum amount of money your insurance carrier will pay out for your policy. There are state-dependent requirements for minimum amounts you need to have for these limits of liability. I asked Canyon, “Can you address the minimum coverage required for injector malpractice insurance by state?” He explained:
“Every state is different on what they do and don’t require. For example, if you are a contractor CRNA and practicing anesthesia in the state of Virginia, the state mandates you have to carry a minimum of $2.45 million/$7.35 million (per occurance/per year) limits as a CRNA. But if you’re opening up a medical spa in Virginia, you may only be required to carry limits of $1 million/$3 million. The requirement is dictated by a class code which is based on your license and what procedures you are doing. If you’re doing primary care or non-aesthetic based work, you pretty much need to abide by the standard state limits. That is not always the case for providing aesthetic services such as botox injections.
Most of the lawyers out there, unless they deal with aesthetics, are going to assume that you need the state limits for your specialty. Though this may not be the case if you’re just doing aesthetics. You may not need that high coverage. Most insurance companies have minimum premiums regardless of the limits. So, if you’re a CRNA branching out to go do botox, they may charge you the same for a $1 million/$3 million as they would for a $500,000/$1 million policy, because you are already coming in at their minimum premium based on the amount of hours and the types of procedures that you’re doing. But in the state of Virginia it’s a double edge sword. If you carry the limits of $2.45 million and $7.45 million, you are kind of painting a target on your back . Like please sue me because you can get over a million dollars.”
In summation of Canyon’s comments, the malpractice insurance coverage for your policy covering your aesthetics practice may be lower than the state minimum requirement for your primary specialty and practice. This makes sense as medical risks are lower in aesthetics than in most other areas of medicine. Also many insurance carriers have a minimum amount they will charge for a policy. An individual injector policy may fall under that amount, and you will still be charged that minimum fee.
What are the key elements you want to look for in an aesthetics insurance plan?
I asked Canyon, “What does an aesthetics provider need to look for when picking an injector malpractice plan to cover neurotoxin and dermal filler injections?” Here’s what Canyon said were the things you want to be included in a policy:
“Number one is professional liability (protects the LLC) and medical malpractice (covers medical provider). A lot of individuals form their own separate LLC or PLLC. Obviously you want to have reasonable limits of liability in compliance with the state minimums we talked about. For example, if you’re a part time CRNA and you’re just doing botox and fillers on the side, you may not necessarily need limits of $1 million/$3 million like you would on your CRNA policy. But you need to have adequate limits on your liability like $100,000/$300,000 which are just inside the limits, if the limits are that low in your state.
Your average aesthetics based policy is going to come with professional liability for your LLC, for the company itself, if its named in the lawsuit. The med mal policy is going to provide the limits of liability for the insurance for yourself or your employees for an actual medical malpractice related claim. 1099 contractors will also be covered if you have added them to your plan.
General liability insurance will be included is your basic slip and fall type coverage (you need this even if you are doing mobile business). Then if you have a medical director, your policy has to have medical director liability. On most of our policies the medical director coverage comes for free, especially if the medical director is not doing any hands on work. If they are only doing supervisory/administrative/looking over charts, they just need medical director liability. If you want to add the doctor on to actually do procedures, then it’s going to cost a little more and you need to make sure they are covered on the group policy for the medical malpractice.
There are a lot a common misconceptions about general liability policies for aesthetics. There is basically 2 different kinds of liability policies depending on the size of your company that you may need. The first is the standard general liability policy. The second is what’s called a business owner’s policy what we call a BOP. The BOP, which is type of policy that someone would take out that’s separate, covers your office/complex for damage, fire, water leak, to replace carpet, wall, etc. Or, if you have $50,000 worth of equipment that gets damaged or stolen, the standard general liability policy under a regular aesthetics based policy doesn’t cover those types of things.
If you do business with Clifton Insurance for an aesthetics policy, we set you up with the professional liability, the medical malpractice, general liability, medical director liability, HIPPA violation coverage, and license protection. That’s pretty much the standard policy. Then if you have an office location that you’re really worried if something got damaged, stolen we set them up with a separate BOP policy or separate commercial property policy. But for most individual based practitioner’s, they don’t take that out. Especially when they are just getting started.”
In summary of Clifton’s comments, main components of your aesthetics malpractice policy are going to be adequate limit of liability, professional liability, medical malpractice, general liability, and possibly medical director coverage and business owner’s policy.
Should I get an umbrella policy?
Umbrella policies are sort of catch-all for things not covered under other insurance policies. I asked Canyon, “Would you recommended getting an umbrella policy when starting an aesthetic injections practice?” He told me this:
“It depends on your injector malpractice policy structure. If we are talking about an individual practitioner or a full on med-spa with 15 employees and 3 million dollars in revenue, most of them still carry the same policy limit. If you carry the limit of $1 million/$3 million that means you have up to a million dollars per claim minus your deductible. The average deductible is either $1,000 or $2,500 for an aesthetics related policy. So if you have the limits of $1million/$3 million you could get sued 3 times per year and you pay the $2,500 deductible per incident. And the claimants are only able to get up to a million dollars per incident.
There are other enhancements you can add to your malpractice that sort of defeat the purpose of having an umbrella policy. Like under a claims-made based policy or occurrence based policy you can request to have defense outside the limits. If you have a $1,000,000 limit of liability on your policy and you have defense paid outside the limits, that means the insurance policy is going to pay the legal team outside the limits of $1 million. So if the insurance carrier pays legal fees of $95,000 and the case settles for a million dollars-then it actually settled for $1,095,000. If you carry defense inside the limits of liability that means inside the million dollars if you paid $95,000 in legal fees, that comes out of the million dollars.
You also have to look at it this way, whenever you get sued, a law firm is going to look at that and they know that you have defense outside of the liability. They know they can get a million for their client and their legal fees will be paid regardless. It basically says we can drag this out as long as we want to because our client will still get a million bucks. As a side note your personal umbrella policy will not cover your LLC. That’s exactly why you formed an LLC, to protect your assets. It wouldn’t apply unless you domicile that umbrella policy under the LLC.
It is also very important to understand that professional liability, medical director coverage, medical malpractice, general liability, etc. for an aesthetics company is completely separate from an auto or home insurance policy. These carriers do no work the same way. In all honesty, probably 95% of policies written for aesthetic based policies are claims-made based. You want to deal with an insurance provider who specializes in this area.”
Basically, umbrella policies are not commonly seen for this. There are enhancements available to your policy that serve a similar purpose. An umbrella policy is only needed if your main policy does not cover specific treatments or procedures.