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Medical Spa Malpractice & Professional Liability Insurance

 

 

According to a recent report from Allied Market Research, the global medical spa market was valued at over $11 billion in 2017, and projected to reach over $27 billion by 2025, growing at an annual growth rate over 12% from 2018 to 2025. However, as revenue grows in this lucrative industry, insurance claims increase as well.  While this industry is generally very safe, it is susceptible to liability lawsuits.

 

Whether a client is unhappy with their result or sustains a serious injury following treatment, claims and lawsuits do occur.  For these reasons, medical spa practices need malpractice insurance and professional liability insurance. 

 

The purpose of this article is to describe the risks involved in medical spas as well as the benefits of Malpractice Insurance and Professional Liability Insurance.  This type of insurance provides peace of mind to practitioners such that protection exists in the event of an unforeseen claim.

Our team is standing by and looking forward to discussing this important risk with you. We focus on the medical spa malpractice insurance arena and can review your business in light of typical medical spa risks and claims and suggest a broad malpractice insurance policy to address these exposures.  

What is the difference between Professional Liability Insurance and Medical Malpractice Insurance?
There is no difference other than the terms being interchangeable.  Professional Liability Insurance will cover a physician or a nurse the same way as a Malpractice Insurance. 

 

What is Medical Spa Malpractice Insurance?

Medical Spa Malpractice Insurance or Professional Liability Insurance as it's also know, insures medical spa practices and licensed or certified practitioners from liability associated with wrongful practices resulting in bodily injury, medical expenses, loss of earnings, pain and suffering.  Most medical spas or laser hair removal centers combine the tranquil setting of a day spa with important acute services performed by licensed, educated, and trained medical professionals, such as doctors, aestheticians, nurses and laser technicians. This includes a broad range of services, which range from chemical peels and laser hair removal to Botox injections. These services usually require a high-level of knowledge. Medical spas assume a high level of risk when performing these services since if something goes wrong, the unintended side effects could be significant. Many clients go to a medical day spa and expect the results of a typical day spa, which are relaxed and low risk. When a client experiences dissatisfaction following a medical spa appointment, he or she may end up filing a medical malpractice claim or lawsuit.  Below is a list of general services a medical spa provides and the risks involved in each one.

  • Light and Energy Services – this includes tattoo or fungus removal.  If unanticipated bodily injury occurs during a service using lasers, intense pulsed light (IPL), radio-frequency machines or other light services, then a medical spa malpractice policy will respond. A common risk involved in these services is an accidental burn from laser hair removal.

  • Injectable Services – this includes administering Botox injections or other common injectable services.

  • Wellness – Weight loss and nutritional counseling may seem harmless, however if a client is unhappy or sustains adverse health effects from nutritional advice, then he or she may file a lawsuit.

  • Aesthetics – These services include cryotherapy, body wraps, oxygen inhalation, infrared saunas and more. Unfortunately, side effects can occur, which may lead clients to file a suit against the medical spa.

What does Medical Spa Malpractice Insurance Cover?

Claims related to professional liability usually fall into one of three categories

  1. Oversights and errors – this is the most common type of claim, which relates to financial damage caused due to errors made by you or the business. An example if when an error occurs during a laser procedure, which leads to a client burn.

  2. Failure to complete a service – this type of claim relates to actions the spa needed to take, but did not, and as a result caused damage to the client.

  3. Services that don't live up to industry standards – this type of claim occurs when the client incurs financial damage because the services provided, while not erroneous, did not meet the typical standard expected in the industry.

Medical spa malpractice insurance claims are broad and often times unwarranted. When a client is disappointed and sustains some level of financial damage, their instinct is to sue everyone involved, even if the services provided by the medical spa were adequate and consistent with industry standards. This requires medical spas defend false accusations. Unfortunately, a good defense of false accusations is often very expensive. Here is a detailed list of coverages typically offered under medical spa malpractice insurance policies.

  • Damages – Professional liability insurance covers judgments and settlements of claims that are a result of services provided. This includes errors, mistakes, omissions or advice that harms the client.

  • Defense costs – This type of insurance helps pay defense costs that result from a claim made against the Medical Spa by a client who is unhappy with the services received or because of a mistake or error.

  • Personal injury – Malpractice liability insurance responds to cover the costs associated with personal injury claims. These can include libel and slander claims.

  • Disciplinary proceedings – Professional liability insurance covers the expenses associated with legal proceedings brought by a regulatory, licensing or other government agency alleging professional misconduct.

  • Loss of earnings - Malpractice insurance helps cover your lost earnings for the time that you spend at depositions and trial.

  • Subpoena assistance – Medical Spa malpractice insurance responds to the expenses associated with the receipt of a subpoena in a lawsuit in which you are a witness.

  • Temporary staff – This professional liability insurance covers claims associated with employees, temporary staff or independent contractors.

What does Medical Spa Malpractice Insurance Not Cover?

Policies offered by Medi Spa Insurance Pros are packaged to include a broad range of coverages.  However, a Professional Liability or Medical Malpractice policy provides specific coverage for the alleged wrongful acts which resulted in bodily injury from a spa service.  Other coverages are packaged to cover the other exposures such as fire and slip/fall claims.

  • Intentional or Malicious Acts – if a claim occurs out of a deliberate malicious act, the malpractice policy will not provide coverage.

  • Illegal Acts – common with most insurance policies, if an act leading to a claim was illegal, then the insurance policy will not provide coverage.

  • General Liability – for example, if a client slips and falls in the medical spa then a general liability policy will respond, not a malpractice policy.

  • Employee Injuries – malpractice liability insurance will not cover expenses related to employee injuries as a Workers' Compensation Insurance policy does.

  • Employment Disputes – professional liability insurance will not cover expenses related to employment disputes as an Employment Practices Liability Policy covers this type of exposure. 

  • Property Damage – malpractice insurance will not cover expenses related to property damage as a property insurance policy covers this type of damage. 

  • Cyber Breach – malpractice insurance or professional liability insurance will not cover expenses related to cyber breach.  However, we have an optional Cyber Liability Insurance endorsement  which can be added to the policy.  Additionally, Cyber Liability Insurance is available as a stand-alone policy.  Stand alone Cyber Insurance policies offer substantially more liability coverage as well as other coverages which include Business Income, Phishing, Social Engineering and more. 

How Much Does Medical Spa Insurance Cost?
The premiums for Medical Spa professional liability insurance depend on various factors. The cost for spa insurance starts from $500.  However, you should not buy a $500 policy because it will only provide General Liability Insurance (GL).  A medical spa policy should be packaged to include; General Liability, Professional Liability, Cyber Liability, HIPPA, License Action, and Business Contents coverage.  You can apply for a medical spa insurance quote here.
These include the type of procedures completed at the spa, the State where the Medical Spa is located, the number of locations, the amount of revenue, the number of staff and type of staff employed or contracted and the claims history.  Below is a list of procedure and their classification. Class 1 services have a higher risk and usually lead to higher premiums.
What Type of Procedures are Covered:
Examples of Class 1 Procedures
Botox (and Similar)
Mesotherapy
Laser Treatments
Fotofacial (and similar) IPL
Laser hair/tattoo removal
Dermal Fillers
Chemical Peels 
Sclerotherapy
Examples of Class 2 Procedures
Facials
Glycolic Peels
Massage Treatments
Permanent Makeup
Electrolysis
Non-invasive Skin Treatments
Class 1 procedures require an MD, or an RN/NP/PA under the supervision of a physician. Class 2 procedures, however, only require an aesthetician. These rules vary by State, but the menu of services will always influence premium due to the varying risks involved in each procedure. In general, premiums usually range from $5,000 to $10,000, although underwriting factors could lead to higher premiums, especially for Medical Spa’s with an adverse claims history.
For a full list of services visit: What We Insure

What are typical Medical Spa Malpractice Insurance Claims?

Below are various medical spa malpractice insurance potential claims.

  • Laser Burns - laser burns are the most common type of claim against medical spas. This may occur during laser hair removal, intense pulsed light (IPL) hair removal, photo facials or even tattoo removal. Usually, burns or scarring is the result of either using the wrong setting on the laser or misclassifying the Fitzpatrick Skin Type in the first place. Typical laser burn damage or scarring claims range from $50,000 to $100,000. The introduction of the light associated with IPL may lead to complications.

  • Botox – a Botox procedure is very popular as a client strives to fight common effects of the aging process. The chemicals used in this procedure, botulinum toxin type A and botulinum toxin type B, are substances derived from a bacteria. The procedure works by blocking muscular nerve signals, which leads to weakened face muscles and ultimately reduced wrinkles. If a client receives too much of the chemicals in Botox, then it may lead to botulism, which is an ill condition commonly associated with severe food poisoning.

  • Chemical Peels – chemical peels, such as microdermabrasion often leave skin thinner. This could leave a client more susceptible to injury. If a client sustains a minor injury exacerbated due to a recent treatment then he or she may make a claim against the medical spa.

  • Permanent Makeup and Microblading – the most common risks associated with permanent make up and micro blading are infection and allergic reactions. Infections occur due to unsterile needles used in the procedure. Allergic reactions may occur due to the pigments used in the procedure.

  • Tattoo Removal – tattoo removal risks include infection, scarring and hypo pigmentation. Another significant risk is that the procedure is ineffective in addition to causing an infection or pigmentation issue.

  • Sclerotherapy – this is a non-surgical procedure aimed at getting rid of unattractive blood vessels. This procedure does involve injections, which could lead to client complications. 

  • Irritation / Bruising – even successful treatments may lead to irritation or bruising, which can lead to client claims.

These claims leave medical spa at high risk of claims or lawsuits. Unfortunately, dissatisfaction with a procedure commonly leads clients to file broader claims or complaints. Below are additional statistics worth noting.

  • Many physician and RN liability policies will not cover medical spa procedures.

  • Defense discovery costs alone for a malpractice lawsuit may easily exceed $25,000.

  • Medical spa related verdicts can and have exceeded $1,000,000.

How much Medical Spa Malpractice insurance coverage is typical?
The typical limit for a Medical Spa Malpractice Insurance Policy is $1mm per claim and $3mm aggregate for all claims; however, excess limits are available based on the needs of the individual spa. Deductibles vary, but usually begin at $2,500 and then increase based on the risk appetite of the medical spa. A higher deductible will usually lead to a lower premium rate.

 

Medical Spa Malpractice Insurance is “Claims-Made”

 

Medical Spa malpractice insurance policies are ‘claims made’ in contrast to a typical general liability policy, which is ‘occurrence based’. Claims-made coverage means claims have coverage when filed during an active policy period, as long as the insurable event occurred after the retroactive date as defined in the policy. With a claims-made policy, however, you must have active insurance when you file (or become aware of) a claim. For example, if you decide to cancel your policy or do not pay the premium, then your coverage will lapse and you will not have coverage for any claims, even if they occurred when coverage was in force. Therefore, it is important for a business to know when their initial exposure began in order to establish an accurate retroactive date.

For example, a medical spa has a malpractice policy covering liability associated with services performed by the spa. The Spa performed a service in 2018, but received a lawsuit in 2019 for additional medical costs incurred because of the earlier performed service at the spa. Even though the service occurred in 2018, the 2019 malpractice policy would respond to cover claims made in 2019. Therefore, the malpractice insurance policy must specify that the retroactive date is 2018 to make sure that coverage extends to the initial service.

 

Who offers this Coverage and How Do I Buy it?

While premiums and coverage terms vary widely, many insurance companies offer medical spa malpractice insurance. Our team understands the insurance carriers that tend to offer the broadest coverage terms for reasonable premiums. Our job is to review the risk exposure at your medical spa against the malpractice coverage available in the marketplace and then provide you multiple quotes in order to help design a broad and effective professional liability insurance program to protect your business.

 

 

Claims in the medical spa industry could lead to significant financial damage of the company. As a result, medical spas need to consider malpractice insurance as a part of the company’s insurance portfolio. Medical spas must expect an unforeseen claim may occur and plan accordingly. By securing this important insurance coverage, medical spa have peace of mind knowing that a serious claim will not cause the business to close its doors.