What is Pharmacy Liability Insurance?

Surety Bonds

A surety bond is required for Medicare suppliers, according to the Pharmacists Mutual Insurance Company. As with other licenses, such as drivers' licenses, the holder of the supplier license must post a bond. Normally with drivers' insurance, the driver signs a policy with an insurance company, which posts a surety bond for the driver as long as the driver continues to pay premiums to the company. A surety guarantees that it will pay the liabilities of another party, usually charging a periodic premium for providing this service. The surety bills a periodic premium to the client on a fixed schedule. In this case, the bond is for suppliers of durable medical equipment, such as prosthetics, crutches and wheelchairs.

Judgements against a pharmacy can total millions of dollars. The American Society of Health System Pharmacists reported a case where two physicians and a pharmacy technician were found liable for a total of $7.1 million dollars. A baby received a 750 microgram dose of blood pressure medication instead of the 6 micrograms prescribed, causing neurologic damage. The article also mentions that only 10 percen of civil cases go to court, as the plaintiff's lawyers try to negotiate a settlement based on the defendant's amount of liability coverage.

Pharmacy liability insurance protects the pharmacy from litigation expenses. According to the Pharmacists' Mutual Insurance Company, their policies cover costs of defending a lawsuit, including lost wages, taxes, insurance on the judgement, additional bonds related to the suit and reimbursement of attorney costs.

State boards of pharmacy determine the required coverage for pharmacy license holders in each state. The California State Board notes that a surety bond on file in Florida does not meet the requirement for California. It also notes that pharmacies are considered wholesalers, so the state regulations including bonds and insurance that apply to other wholesale stores also apply to a pharmacy. This requires a chain pharmacy to purchase a separate policy for each state it operates in, unless the insurance company also offers policies in each state.

Pharmacy liability insurance also covers other issues related to operating a retail business, according to the insurance program brokers' association Marsh Affinity. General liability coverage protects the pharmacy if customers are injured while they are shopping at the store. Securities coverage protects the pharmacy from theft of money, as well as check fraud and counterfeit currency. Pharmacy insurance also can cover labor disputes, health code violations and civil rights lawsuits.