Know Your Policy: Liability Risks for Medspas

KNOW YOUR POLICY Key Terms: Liability Risks for Medspas Medical spas continue to expand the range of services they offer, from aesthetic procedures to weight loss, IV therapies, and alternative, regenerative, or off-label treatments.

As offerings evolve, coverage may be impacted by how services are delivered, who performs them, and whether treatments—including non-FDA-approved or compounded products—are disclosed and contemplated within the policy. Policies may include exclusions, limitations, or require specialized coverage to address these exposures.

Claims-Made vs. Occurrence Policy Form Determines whether coverage is triggered based on when a claim is made or when the incident occurred.

Commercial General Liability (CGL) Insurance Covers third-party bodily injury and property damage but generally does not apply to claims arising from professional medical services.

Cyber & Privacy Liability Insurance Responds to data breaches, cyberattacks, and privacy violations involving patient information.

Healthcare Liability Insurance Also known as Medical Malpractice Insurance or Professional Liability Insurance. Covers claims alleging injury, misrepresentation, or lack of informed consent arising from medical services.

HIPAA Violations Sublimit A sublimit that may apply to claims involving violations of the Health Insurance Portability and Accountability Act (HIPAA), which can restrict how much coverage is available for privacy-related losses.

Medical Directors and Other Professionals as Insureds Depending on policy terms, insured status may be extended to medical directors, physicians, independent contractors, students, volunteers, non-physician employed staff, and licensed professionals such as nurse practitioners and physician assistants, but only if those individuals are specifically included in the policy.

Non-FDA-Approved or Compounded Drug Exclusions May exclude claims involving research-grade compounds, off-label treatments, or medications not authorized for patient use.

Personal and Advertising Injury Coverage Can respond to claims alleging misleading advertising or misrepresentation, subject to policy wording and exclusions.

Product Liability Exposure Liability arising from the use, administration, or distribution of products such as biologics, compounded medications, or regenerative therapies. These exposures may not be fully addressed under Healthcare Liability Insurance and may require separate Product Liability coverage depending on policy structure.

Scope-of-Practice Exclusions May limit or eliminate coverage when services are performed outside licensing requirements or without required supervision.

SAM Insurance Provides coverage for sexual abuse and molestation (SAM) allegations, which are typically excluded from standard liability policies.

SAM Sublimit A sublimit that may apply to sexual or physical abuse claims, meaning coverage may be capped below the overall policy limit.

For additional insights on Healthcare Liability Insurance, visit burnsandwilcox.com/specialties/healthcare This commentary is intended to provide a general overview of the issues contained herein and is not intended, nor should it be construed, to provide legal or regulatory advice or guidance. If you have questions or issues of a specific nature, you should consult with your own risk, legal, and compliance teams.