pharmacy liability insurance

pharmacy liability insurance

The Westwood Insurance Group will work with you to find the best pharmacy liability insurance coverage, along with other coverage for every possible threat they face.

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Insurance for Pharmacies

Pharmacy liability insurance is essential, but pharmacies face a myriad of challenges that can influence the type of insurance coverage they require. A commercial insurance agent targeting this sector should be well-versed in these challenges to tailor their products and services effectively. Some of the challenges facing pharmacies include:

  1. Regulatory Compliance: Pharmacies have to comply with various federal, state, and local regulations, such as the Drug Enforcement Administration (DEA) guidelines, Food and Drug Administration (FDA) regulations, and state-specific pharmacy laws. Non-compliance can lead to heavy fines and legal repercussions.

  2. Inventory Management: Pharmacies must manage and safeguard valuable and sometimes perishable inventory. They are at risk of financial losses due to theft, spoilage, or mismanagement.

  3. Cybersecurity: Pharmacies store sensitive patient information, making them targets for cyber-attacks. Breaches can result in significant financial penalties and damage to the pharmacy’s reputation.

  4. Professional Liability: Mistakes in prescribing or dispensing medications can lead to severe health implications for patients. Pharmacies need protection from potential lawsuits stemming from these errors.

  5. Reimbursement Rates: The ever-changing reimbursement rates from insurance providers can strain a pharmacy’s profitability. As these rates decrease, pharmacies may struggle to maintain a sustainable profit margin.

  6. Competition: The rise of big-box retailers and online pharmacies has increased competition for independent pharmacies, potentially reducing their customer base and squeezing margins.

  7. Supply Chain Disruptions: Disruptions in the pharmaceutical supply chain can hinder a pharmacy’s ability to provide medications, impacting their service levels and revenue.

  8. Natural Disasters and Other External Risks: Pharmacies, like any other business, are vulnerable to natural disasters, fire, vandalism, and other external risks.

  9. Employee Issues: Allegations of employee misconduct, discrimination, wrongful termination, or other employee-related issues can lead to lawsuits.

  10. Business Interruption: Interruptions in operations due to unforeseen circumstances can have a detrimental impact on a pharmacy’s revenue.

  11. Compounding Risks: For pharmacies that compound medications, there are added risks of contamination, incorrect dosage, or other errors that could potentially harm patients.

  12. Increasing Costs: The rising costs of drugs and operational overheads can strain a pharmacy’s financial health.

Understanding these challenges will not only allow insurance agents to offer better coverage but will also build trust and foster strong relationships with pharmacy clients.

what specific insurance do pharmacies need?

Pharmacies require a unique blend of insurance coverages due to the nature of their operations, dealing with medications, sensitive patient information, and regulatory requirements. Here are the specific types of insurance that pharmacies typically need:

  1. General Liability Insurance: This basic business policy provides coverage against claims of bodily injury, property damage, and personal/advertising injury related to the pharmacy’s operations.

  2. Professional Liability (Errors & Omissions) Insurance: Given that pharmacies handle medications, they’re at risk of lawsuits stemming from prescription errors, incorrect advice, or other professional mistakes. This insurance covers legal fees and settlements associated with such claims.

  3. Property Insurance: This covers damages to the pharmacy’s physical assets like the building (if owned) and its contents, including medications, equipment, and fixtures, due to events like fire, theft, or vandalism.

  4. Business Interruption Insurance: If an event like a natural disaster or fire prevents the pharmacy from operating, this coverage helps replace lost income and covers ongoing expenses during the downtime.

  5. Cyber Liability Insurance: Since pharmacies store sensitive patient information, they’re targets for cyber-attacks. This coverage helps with expenses related to data breaches, including notification costs, credit monitoring, legal fees, and fines.

  6. Workers’ Compensation Insurance: If an employee gets injured or falls ill because of their job, this insurance provides wage replacement and medical benefits. It’s mandatory in most states.

  7. Commercial Auto Insurance: If the pharmacy offers delivery services or owns vehicles for business use, this insurance covers any damages or injuries resulting from auto accidents.

  8. Equipment Breakdown Insurance: Covers the cost of repairing or replacing pharmacy equipment, like refrigeration units or computer systems, if they break down.

  9. Spoilage Coverage: Since some medications require refrigeration, this coverage compensates for the loss of perishable medications due to equipment breakdown or power outages.

  10. Employment Practices Liability Insurance (EPLI): Protects against claims by employees related to discrimination, wrongful termination, harassment, and other employment-related issues.

  11. Crime Insurance: Offers protection against losses due to employee theft, forgery, or fraud.

  12. Umbrella/Excess Liability Insurance: This provides an extra layer of protection over the existing liability policies, granting additional coverage if the primary policies are exhausted.

  13. Directors & Officers (D&O) Insurance: If the pharmacy is part of a larger organization or chain, D&O insurance protects directors and officers from personal losses if they’re sued for decisions made in their role as leaders of the company.

  14. Product Liability Insurance: In cases where a pharmacy might compound or create their medications, this insurance covers any damages resulting from those products causing harm.

When considering insurance, it’s essential for pharmacies to consult with an experienced insurance agent who understands the nuances of the pharmaceutical industry. This ensures that the coverage matches the specific risks and challenges faced by the pharmacy.

advice for commercial agents approaching pharmacies

Commercial insurance agents approaching pharmacies should consider the following :

  • Customized Coverage: Agents should tailor insurance policies to address the unique needs and challenges of each pharmacy, offering coverage options for professional liability, property protection, cyber liability, and more.

  • Risk Management Advice: Agents can add value by offering pharmacies advice on risk management, helping them minimize potential claims.

  • Staying Informed: Agents should stay updated with the changing landscape of the pharmaceutical industry and regulations, ensuring their insurance solutions remain relevant.

  • Relationship Building: Building strong relationships with pharmacy owners and understanding their day-to-day operations will help insurance agents provide more personalized and effective solutions.

Understanding these challenges will not only allow insurance agents to offer more tailored coverage that better protects their clients, but will also allow them to build trust and foster strong relationships with pharmacy clients.

Contact Michael Richards now

Michael specializes in insurance for this particular group. You can call him on the number below or fill out the form and he will get your message directly:

Michael Richards

sourcing the best pharmacy liability insurance is essential for commercial agents wanting to protect their client


General Liability Insurance

General Liability insurance cover medical expenses and attorney fees which result from bodily injuries and property damage that your company or organization could be legally responsible for.

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Professional Liability Insurance

Professional liability insurance, also known as errors and omissions insurance (E&O) and medical malpractice insurance, protects your business against claims of negligence, malpractice, errors, and omissions which may have occurred during the fulfillment of a professional service.

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Telemedicine Malpractice Insurance

telemedicine malpractice insurance—also known as digital health insurance or eHealth insurance—has become increasingly vital for healthcare providers. to  protect them against claims of negligence, malpractice, errors, and omissions which may be the result of the limitations of webcam quality or the inability of a patient to properly photograph a condition. It can also cover cyber liability, such as remote controlled medical devices being hacked.

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Directors and Officers Liability (D&O) insurance

D&O insurance (Directors and officers liability insurance), shields the personal assets of company directors and officers, and where necessary, their spouses, from claims which could arise as a result of the decisions they made and actions they took within the scope of their regular duties.

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Cyber liability insurance

Cyber liability insurance covers the financial costs associated with a breach of your cyber security, such as a ransomware attack. It also covers first party costs including event management, data restoration, financial costs to third parties, network interruption, and cyber extortion.

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HNO Insurance

HNOA, (hired non-owned auto insurance) is designed for organizations who regularly hire vehicles or require employees to use their own vehicles in the course of their work. In the case of an accident where your employee was liable, it could cover physical damage to that other person’s vehicle, medical expenses, the cost of hiring an attorney to defend your business.

Workers’ Comp. Insurance

Workers’ compensation insurance covers your employees for workplace injuries or illness. It provides them with medical and wage benefits.

This coverage is mandated by each state, with the wage and medical benefits varying from state to state. Workers compensation also protects business owners from civil suits by workers who become injured on the job.

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Employment Practices Liability

Employment practices liability insurance (EPL insurance or EPLI), covers employers (PDF) against claims made by employees for:

  • Discrimination (based on sex, race, age or disability, for example)
  • Wrongful termination
  • Harassment
  • Failure to promote and other employment-related issues
Sexual Abuse & Molestation (SAM)

Sexual Abuse and Molestation Insurance provides coverage for organizations against claims arising from alleged sexual misconduct or molestation by an employee or other representative of the organization. 

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Environmental Liability insurance

Environmental Liability insurance is liability insurance specifically designed to protect environmental liabilities. This is a specialized form of general, commercial liability insurance that provides financial protection against litigation and clean-up costs resulting from claims of injury or damage caused by pollution, contamination or hazardous waste disposals. 

Commercial Property Insurance

Commercial property insurance is a fundamental component of risk management for healthcare and senior living providers. It is designed to protect the organization’s physical assets, such as buildings, medical equipment, furniture, and supplies, from financial losses due to damage or theft.

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Crime Insurance

Crime Insurance covers the insured party a reimbursement if their property is damaged due to a crime. Crime Insurance usually has a huge range of options and comes in different forms. It can be either a rider that can be attached to the existing insurance policy, or it is available as a completely separate product.

Commercial Auto Insurance

Commercial auto insurance is a crucial aspect of risk management for healthcare and senior living providers. It offers vital financial protection against vehicle-related incidents and is often required by law.

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Fully/Partially Funded insurance

Partially Funded insurance gives facilities the opportunity to pay a set premium for, and then in turn is  partially covered for specific risks.

Fully Funded Insurance allows facilities to pay premiums to have coverage against all risks. In return, if they are unfortunate enough to incur any of the covered loss or injury, they are reimbursed their insurance policy amount.

Excess and umbrella coverage

Excess coverage provides an additional layer of protection over and above what an underlying policy provides. It applies to a single policy only.

An umbrella policy on the other hand, provides additional liability coverage over and above what is provided by a number of underlying policies.

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we've got you covered

General Liability Insurance

Protecting healthcare organizations against increasingly crippling litigation.

Professional Liability Insurance

Protecting medical professionals against increasingly crippling litigation.

Medical Malpractice Insurance

Protecting medical professionals against increasingly crippling litigation.

Cyber Liability Insurance

Protecting healthcare organizations & professionals against cyber attacks.

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insurance for hospitals

Hospital Insurance typically covers all or part of the potential liability for hospital services. It includes medical malpractice, accidents involving hospital employees and equipment, care during surgery or any other invasive treatment, after-hours care arrangements by staff who need help with their children and more.

insurance for long term care facilities

Long term care facilities must protect themselves against potential liability arising from incidents within their facility. Westwood can help you negotiate a package tailored to your long term care facility client.

insurance for physicians

The different types of insurance for physicians includes medical malpractice insurance, professional liability insurance, errors and omissions insurance, an umbrella policy, and professional indemnity. As a physician, you should have access to all of these types of insurance.

traditional insurance products

Westwood have fostered exceptional relationships with underwriters and we go to great lengths to keep abreast of their latest products, changes in requirements and restrictions, including having weekly calls with the carriers, which you can see here, by joining our insurance insider group.

    Insurance products at Westwood Insurance Group

    You can find more information on the Insurance Products main page.

    If you have any questions on the different policies, check out our Insurance FAQ's

    alternative structures

    Westwood President, Michael Richards has extensive experience in setting up alternative structures for larger clients. Here are some examples:

    If you think your client could be large and stable enough to benefit from starting or participating in a captive or has a special need for another alternative structure, contact Michael Richards now by phone: 855 351 7487.