Malpractice insurance is required before you see your first patient, and most insurance credentialing applications require proof of coverage. But the options can be confusing: occurrence vs claims-made, tail coverage, multi-state requirements, and widely varying premiums. This guide breaks down what telehealth providers need to know to choose the right policy.
Occurrence vs claims-made: the key decision
Every malpractice policy falls into one of two categories. Understanding the difference will save you thousands of dollars over the life of your practice.
Occurrence-based policies
Covers any incident that occurs during the policy period, regardless of when the claim is filed. If something happens in 2026 and the patient files a claim in 2029, you are covered even if you no longer carry that policy.
Advantages: no tail coverage needed. Once the policy year ends, you are covered for anything that happened during it, permanently.
Disadvantage: higher annual premiums.
Claims-made policies
Covers claims that are both filed and relate to incidents during the active policy period. If you cancel the policy, you lose coverage for past incidents unless you buy "tail coverage" (an extended reporting period).
Advantages: lower premiums in the first few years (premiums increase annually as the policy "matures").
Disadvantage: if you switch carriers or stop practicing, you need tail coverage, which can cost 1.5-2x your annual premium as a one-time fee.
| Feature | Occurrence | Claims-Made |
|---|---|---|
| Covers incidents from policy period | Yes, permanently | Only while policy is active |
| Tail coverage needed | No | Yes, if you switch or stop |
| Annual premium | Higher | Lower (but increases yearly) |
| Best for | Long-term solo practice | Early-stage, budget-conscious |
| Total cost over 10 years | Often lower | Often higher (after tail) |
Coverage levels
Malpractice coverage is expressed as two numbers: per-incident limit and aggregate (annual) limit.
The standard for most solo providers is $1,000,000 per incident / $3,000,000 aggregate (written as $1M/$3M). This is what most credentialing applications and hospital affiliations require as a minimum.
Some providers opt for $500K/$1.5M to save on premiums, but this can limit which payer panels you qualify for. Unless you have a specific reason to go lower, $1M/$3M is the safe default.
What telehealth premiums actually cost
Premiums vary significantly based on specialty, state, claims history, and policy type. Here are typical annual ranges for solo telehealth providers:
| Specialty | Occurrence (annual) | Claims-Made Year 1 (annual) |
|---|---|---|
| Licensed therapist (LCSW, LPC, LMFT) | $300-800 | $150-400 |
| Psychologist (PhD, PsyD) | $500-1,200 | $250-600 |
| Psychiatrist (MD/DO) | $3,000-8,000 | $1,500-4,000 |
| Nurse Practitioner (PMHNP, FNP) | $1,200-3,500 | $600-1,800 |
These are general ranges. Your actual premium depends on your state (New York and Florida are the most expensive), claims history, years in practice, and the carrier.
Multi-state telehealth coverage
If you practice across multiple states (which many telehealth providers do), confirm your policy covers all states where you are licensed and seeing patients. Some policies cover you nationally by default. Others require you to list each state and may charge additional premiums for high-risk states.
When you add a new state license, notify your carrier immediately. Seeing patients in a state not covered by your policy is the same as being uninsured.
How to compare carriers
Get quotes from at least three carriers. When comparing, look beyond the premium:
- Is the carrier AM Best rated A- or higher? (This indicates financial stability to pay claims.)
- Does the policy include consent-to-settle? (This means the carrier cannot settle a claim without your agreement.)
- What is the tail coverage cost if you switch carriers later?
- Does the policy include license defense coverage? (Covers legal costs if your license is challenged.)
- Are cyber liability and HIPAA breach defense included or available as add-ons?
- Does the premium include all states where you practice?
Carriers commonly used by telehealth providers
- HPSO (Healthcare Providers Service Organization): popular for therapists, NPs, and allied health
- CPH and Associates: behavioral health focus, competitive rates for therapists and counselors
- Berxi (a Berkshire Hathaway company): strong online quoting, good for NPs and psychologists
- The Doctors Company: physicians and psychiatrists
- Proliability: broad specialty coverage, easy online application
The TelemedLaunch playbook includes a full malpractice insurance comparison in Module 3 with a carrier evaluation framework, coverage level recommendations by specialty, and a cost comparison worksheet. See the full system.
When to buy coverage
Get malpractice insurance before you submit credentialing applications. Most payers require proof of active coverage as part of the application. Having your policy in place before you start credentialing prevents a back-and-forth that delays the process.
If you are not yet seeing patients, some carriers offer a "prior acts" date that starts when you begin the policy, protecting you from day one of practice.
Bottom line
For most solo telehealth providers, an occurrence-based policy at $1M/$3M is the straightforward choice. It costs more per year but eliminates the tail coverage headache. If budget is tight in year one, a claims-made policy is fine. Just budget for tail coverage when you eventually switch carriers or retire.
Every decision, one system
Malpractice insurance is one of 8 modules in the Telehealth Practice Launch Kit. Entity setup, credentialing, HIPAA, billing, tech stack, and your 90-day launch plan are all covered.
Get the Launch System: $299