Who actually pays when a patient sues you?
You're a nurse, therapist, or tech. A patient claims you made a mistake. The lawsuit names you personally. Who writes the check? The answer isn't always the same, and the gap between who pays and who doesn't can leave you holding a very expensive bag.
Let's break it down: the insurer, your employer, and—if you're not careful—you.
Does the hospital pay if I get sued?
Sometimes. Most hospitals and clinics carry their own malpractice insurance. That policy typically covers employees for acts within the scope of their job. But here's the catch: the employer's policy protects the facility first. If the insurer can settle the case by blaming you—and they often can—they will. You might not even have a say in whether they settle or fight.
Employer policies also have limits. They usually exclude license defense (the cost of protecting your professional license before a state board) and often cut off coverage the moment you leave the job. If a claim comes in six months after you quit, you're on your own unless you have tail coverage or an occurrence policy.
According to the National Practitioner Data Bank, 26% of medical malpractice payments between 2012 and 2022 were made on behalf of non-physicians—nurses, therapists, techs. That's over a quarter of all payouts. And those payments often come from employer policies that may not have your best interests at heart.
Who pays my legal defense?
If you have your own malpractice insurance, the carrier pays your defense—and usually covers it even if the claim is groundless. Policies from carriers like Berxi (Berkshire Hathaway) pay defense costs outside the policy limits, meaning your $1 million limit isn't eaten up by lawyer fees. Others, like HPSO, include license defense up to $25,000 and cover you even between jobs.
If you rely only on your employer's policy, the employer's insurer provides a lawyer—but that lawyer represents the employer. Your interests may not align. In a deposition, the employer's attorney might advise you to admit fault to protect the hospital. Without your own counsel, you're stuck.
For therapists and counselors, CPH & Associates includes $35,000 in state licensing board defense. That's separate from the malpractice coverage. If a patient files a complaint with your licensing board, that defense kicks in without eating into your liability limits.
Can I be personally on the hook for a settlement?
Yes. If the claim exceeds your employer's coverage—or if you don't have coverage at all—you can be personally liable. A judgment against you could mean wage garnishment, liens on your home, or bankruptcy.
Consider this: the average occupational therapy malpractice lawsuit totals $60,299, according to HPSO. That's just the average. A single claim can easily run into six figures. Without your own policy, you'd have to pay that out of pocket.
Even if your employer covers the settlement, you might still pay indirectly. Some employers require you to reimburse them for deductibles or self-insured retentions. And if you're a contractor or locum tenens, you're almost certainly not covered by the facility's policy.
How insurance companies decide to pay or defend
When a claim comes in, the insurer investigates. They look at the medical records, talk to witnesses, and assess liability. If they think the claim has merit, they'll try to settle. If they think it's baseless, they'll defend you—but that's not guaranteed.
With your own policy, you often have more control. Some carriers, like Proliability, offer consent-to-settle clauses. That means the insurer can't settle a claim without your approval. Employer policies rarely give you that right.
Also, your own policy is portable. You can take it from job to job. CM&F Group policies are portable and include telemedicine coverage. If you change employers or go part-time, your coverage stays in force.
What about occurrence vs. claims-made?
This matters a lot for who pays. Occurrence policies cover incidents that happened while the policy was active, no matter when the claim is filed. You don't need tail coverage. CPH & Associates offers occurrence policies, as do HPSO, NSO, and Proliability.
Claims-made policies only cover claims filed while the policy is active. If you leave a job and cancel a claims-made policy, you need tail coverage—which can cost 1.5 to 2 times your annual premium. Without it, you're exposed for past work.
Most employer policies are claims-made. If you leave and don't buy tail, you're personally on the hook for any claim that comes in later. That's a huge gap.
How much does your own policy cost?
It's probably less than you think. Here are typical annual ranges (final pricing comes from the carrier at quote):
- Registered Nurse (RN): $100–$150
- Nurse Practitioner (NP): $990–$2,000 (Proliability lists ~$991 employed, ~$1,190 self-employed; Berxi typical $1,400 for $1M/$3M)
- Therapist / counselor: $363–$765 (Berxi: ~$363 supplemental, ~$765 primary)
- Physical / Occupational Therapist: $100–$350
- Dental Hygienist: $45–$150
- Massage Therapist: $96–$235 (BBI from $96/yr, ABMP $199/yr, AMTA $235/yr)
- Esthetician: ~$120/yr (BBI from $9.99/mo)
- Notary Public (E&O): $20–$100
- CRNA: $1,500–$3,000
For the price of a dinner out each month, you can get coverage that protects your license, your savings, and your career. Compare carriers at our carrier comparison hub.
Do you really need your own policy?
If you're an employee and your employer's policy is solid—occurrence form, high limits, includes license defense—you might be okay. But most employer policies don't check all those boxes. And if you're a contractor, locum, or work multiple jobs, you definitely need your own.
Check your employer's certificate of insurance. Ask if the policy is occurrence or claims-made. Ask if you're covered for license defense. If you don't get clear answers, buy your own. It's cheap insurance against a life-altering event.
For specific profession guidance, see our guides: NP, RN, therapist, PT, OT, dental hygienist, massage therapist, and more.
Caveat: All numbers above are estimated annual ranges. Your exact premium depends on your specialty, location, claims history, and coverage limits. Always get a personalized quote from the carrier.