Clinic, medspa and studio owners: who covers the clinic itself?

Does a clinic need its own malpractice cover when every contractor carries their own?

A contractor’s malpractice policy protects the contractor. It doesn’t necessarily extend to the clinic owner or the operating company that books, bills, supervises and advertises the work. Erik Malthaner puts it plainly: “Your practitioners carry their own malpractice coverage, but that doesn’t necessarily protect the clinic itself. The clinic has its own exposures as an organization.”

The conversation tends to go like this:

“Every practitioner here has their own insurance. I check.”

“Their policies cover them. Who covers the company that hired them, keeps the records and runs the ads?”

Many clinics require every contractor to carry their own cover. That cover responds for the practitioner. A claim against the clinic company is a separate question.

When does a claim name the clinic as well as the practitioner?

Plaintiffs often name everyone involved and leave the courts to decide who is responsible. Claims commonly reach the clinic when the allegation involves:

• inadequate supervision
• improper hiring or credentialing
• clinic policies and procedures
• documentation failures
• appointment triage
• failure to follow up on test results or referrals
• advertising or representations made by the clinic
• vicarious liability, meaning the clinic is held responsible for someone else’s work

What does this look like at a chiropractic clinic?

Take a chiropractic clinic with three associate chiropractors and two registered massage therapists. Each practitioner holds their own professional liability cover. The clinic company hires them, books the patients, keeps the records, sends the invoices and runs the ads, which makes it a separate insured with its own exposures, whatever the practitioners carry.

Which coverage gaps show up most often at a multi-practitioner clinic, medspa or studio?

Cyber and privacy comes first in the files we see. Then clinic-level malpractice, limits that are thin for the number of practitioners working under one name, and missing equipment and business interruption cover. As Erik Malthaner says: “Five years ago the biggest concern was malpractice. Today, cyber and privacy claims are one of the fastest-growing exposures because nearly every clinic stores personal health information electronically.”

What happens after a health-records breach under PHIPA?

A clinic that is a health information custodian under Ontario’s Personal Health Information Protection Act, 2004 (PHIPA) has duties when records are stolen, lost, or used or disclosed without authority. Section 12 requires the custodian to notify the affected individuals at the first reasonable opportunity, and Ontario Regulation 329/04 sets out when the Information and Privacy Commissioner of Ontario has to be notified as well.

A cyber and privacy policy can respond to the costs that follow, such as breach response, notification and the defence of privacy claims, depending on the wording. Commonly excluded under standard Ontario malpractice and general liability wordings: data breaches and privacy claims. Exclusions vary by insurer and by policy form; the issued policy governs.

How do limits work when many practitioners work under one name?

A per-claim limit is the most a policy pays for any one claim. An aggregate limit is the most it pays for all claims in the policy year combined. When a dozen practitioners work under one clinic name and share one clinic policy, every claim against the clinic draws on that same aggregate.

What about lasers, tables and treatment equipment?

A commercial property policy covers contents and equipment against the perils its wording names, and business interruption cover responds to lost income while a clinic is closed after an insured loss. Equipment breakdown is often a separate coverage. This gap shows up most at medspas, rehab and physiotherapy clinics, chiropractic offices and aesthetic treatment facilities, where one machine carries a lot of the revenue.

What do clinic owners collect from contractors, and what do they miss?

Most clinics collect a certificate of insurance, a one-page summary of a policy’s insurer, limits and dates. Erik Malthaner sees contractor minimum limits commonly set somewhere between $1 million and $5 million, depending on the profession. In his experience, the gap is rarely the limit itself but a certificate that has not been checked since the contractor started.

Some clinics also ask for confirmation of the contractor’s general liability cover, cyber and privacy cover where the contractor handles patient records, and additional insured status for the clinic on applicable liability policies where an insurer makes it available. Additional insured status names the clinic on the contractor’s policy for claims arising from the contractor’s work.

What happens when a contractor on a claims-made policy leaves?

A claims-made policy responds to claims made while it’s in force. When a contractor leaves and lets that policy lapse, a later complaint about their work at the clinic has no contractor policy to go to, and the clinic is the party left in the claim. Whether departing contractors keep their cover in place, or arrange tail coverage, is one of the most commonly forgotten items on the list.

Employee or contractor: does the insurer look at how the relationship really works?

Yes. Insurers, courts and regulators look past the title on the contract to how the work actually happens: who sets the hours, who controls how services are delivered, who owns the equipment, who collects payment, who provides the space, whether the practitioner works elsewhere, and how built into the business they are. The Canada Revenue Agency’s guide RC4110, Employee or Self-employed?, uses similar factors for tax purposes.

Classification itself is a legal and tax question for the clinic’s lawyer and accountant. What matters for insurance is that the answer on paper matches what happens in the clinic every day.

Studio owners renting space to instructors: whose policy responds?

Often both. A claim from a class can name the instructor, the studio and the property owner at the same time, and many studio policies are written to protect the studio’s own operations rather than the instructors who rent space there. Studio agreements commonly ask instructors for proof of professional liability and general liability cover, annual certificates, minimum limits and an indemnity clause.

Where does a clinic owner start?

With three documents: the clinic’s own policy, the certificates on file for every contractor, and the contractor agreement. Reading them side by side shows whether the clinic entity is insured in its own name, whether every certificate is current, and whether the limits match what the agreements require. That review takes an afternoon, and it’s far easier before a claim than after one.

Pull the certificates. Check the dates. And if the clinic itself has never been looked at as a separate insured, talk to a broker who will look at the whole operation rather than one practitioner’s policy, because the clinic’s exposures don’t show up on anyone else’s certificate.

A certificate in the drawer only matters if it was still current on the day of the claim.