Do TPAs get malpractice insurance?

The smart ones do.

I had malpractice coverage when I owned my own TPA from 1986-1998 and our trust company that I merged into did as well.

Haven't been an owner since the mid 2000's but I'm pretty sure the firms I've worked with since then have the coverage as well.

By way of illustration, here is a list of coverage and exclusions from our policy.

Coverage:

• Miscellaneous Professional Liability (typical errors & omissions)

• Information Security & Privacy Liability (protection of data and privacy)

• Personal Injury Liability (someone gets injured)

• Website Media Content Liability (information presented on website)

• Privacy Notification Costs (remediation if breach of data privacy)

• Regulatory Defense and Penalties (legal representation)

• PCI Fines, Expenses and Costs (more data protection)

• Consequential Reputational Loss (loss of business from hit to reputation)

• Electronic Crime Endorsement (electronic funds transfers)

• Fraudulent Instruction Coverage (fraudulent instruction by someone outside the firm)

• Telecommunications Fraud Endorsement
  (fraud by a third party using our telecommunications services)

Exclusions:

• War and Terrorism Exclusion Endorsement

• War And Civil War Exclusion

Generally, any willful act of fraud or collusion on our part is not covered, and any consequences of providing incorrect or incomplete information, or a failure to provide information is covered.

As sign of the times, It is striking how much greater detail there is in more recent policies related to privacy of data and to fraudulent transactions.

In addition to coverage amounts, the underwriting process is influenced by business structure, number of staff, professional credentials of staff, number of clients, scope of services, data security and gross revenue.

If you are talking with people looking to enter the business, inform them on business structures that best avoid exposing their personal assets to the financial risks of the business, and emphasize that E&O insurance is like health insurance, auto insurance and life insurance - you hate to pay the premiums but you will be thankful you have the insurance if when you need it.