Pharmacy Insurance: Cost & Quotes from $5

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Pharmacy insurance is a protection plan for retail, compounding, consulting, and other types of pharmacies. With this, you enjoy a shield against liability lawsuits, malpractice claims, business property damage, and other exposures. Read this guide to know how this works, the cost of premiums, and the best companies.

Malpractice Insurance for Pharmacies

Customers can sue your pharmacy for the wrongdoings and oversights of its pharmacists, pharmacy technicians, pharmacy assistants, and other employees. Here are some examples:

• A compounding pharmacy in New York faced a $30,000 negligence claim for drug poisoning 

• A Baltimore pharmacy was accused of filing fraudulent prescriptions and faced a $15,000 fine

• A famous pharmacy chain had to pay $25.8 million after a teenage pharmacy technician made a blunder and gave a customer blood thinner pills 10 times greater than the intended amount 

Pharmacy liability insurance programs offer malpractice insurance. Also called professional liability insurance, this grants a shield if your pharmacy faces a lawsuit due to the oversights or negligence of employees. Malpractice insurance grants $2 million-$5 million you can use to:

• Pay settlements

• Cover attorney fees, investigation fees, and other defense costs

• Court judgments 

Note that negligence and errors are just two of the perils malpractice insurance can cover. Other exposures that this insurance can take care of are breach of confidentiality, violation of fair dealing, violation of good faith, and breach of contract. 

It’s possible for your pharmacy’s malpractice insurance to be comprehensively underwritten. And so, it might also provide additional benefits such as:

• $250,000 defense coverage if regulatory bodies conduct an investigation and file a lawsuit against your business

• $25,000-$50,000 defense coverage for HIPAA violation claims against your business

• $250,000 for proceedings involving the termination or suspension of your pharmacy’s license

General Liability Insurance for Pharmacies

Your pharmacy has liability if an accident happens within its premises that result in the injuries or property damage of customers. Because of this, pharmacy business insurance packages allow you to get a general liability policy. 

General liability insurance covers claims for bodily injuries or property damage filed by customers, independent contractors, vendors, and other third parties against your business. Use this insurance when:

• A customer sues your pharmacy after choking on a tablet

• An independent contractor falls from a height while installing signage or cleaning your storefront

• An employee of a supplier experiences an accident while unloading supplies and demands compensation from your pharmacy

So what costs does general liability insurance help you pay for? This insurance usually covers these expenses:

• Medical treatment of injured third parties

• Reimbursements for property damage

• Settlements

• Attorney fees, court filing fees, investigation fees, and other defense costs

• Court judgements

Pharmacy general liability insurance provides $1 million-$2 million minimum coverage to claims for bodily injuries and property damage. But note that this isn’t the only perk you enjoy. This insurance also provides these additional coverages:

• $1 million coverage to claims for slander, copyright infringement, libel, breach of confidentiality, and invasion of privacy

• $300,000 indemnification to the landlord if a commercial space you’re renting gets damaged by fire

• Coverage for the medical treatment of third parties who gets injured in an auto accident caused by a hired/borrowed commercial auto

Product Liability Insurance for Pharmacies 

Customers might file a claim and accuse your pharmacy of selling expired drugs and other consumer goods. This isn’t far from happening. Look at this example:

• A popular online pharmacy was sued by stores in Pennsylvania and had to pay $450,000 after allegedly selling expired over-the-counter drugs, infant formula, and dairy products

Malpractice insurance might provide coverage if a customer accuses your pharmacy of keeping and selling expired products. Nonetheless, the policy that surely grants protection is product liability insurance. 

Product liability insurance doesn’t only cover claims for the sale of expired products. It will also grant a shield if you allegedly sold products with:

• Manufacturing issues

• Labeling issues

The minimum coverage your pharmacy can get from product liability insurance is $2 million. Use this to cover expenses for:

• Medical treatment of customers who got sick or injured after using the product of your pharmacy

• Public relations

• Product recall and extra labor

Excess Liability Insurance for Pharmacies 

Lawsuits against pharmacies are always in six or nine figures. It’s really easy to use all the funds of your general liability, product liability, or malpractice insurance. Consider getting excess liability insurance if you fear running out of coverage when you need it. 

Excess liability insurance, also called umbrella liability insurance, is a type of pharmacy insurance policy that doesn’t grant protection against any type of liability. 

Instead, it adds an extra layer of coverage to your general liability, product liability, or malpractice insurance. So in other words, this insurance will:

• Grant emergency funds if your general liability, product liability, or malpractice insurance runs  out of money

• Cover excess you need to pay yourself if general liability, product liability, and malpractice insurance lacks the funds to cover a claim fully

Note that sometimes, excess liability insurance is automatically added to general liability and malpractice insurance. In this case, it will provide $5 million-$10 million. 

Commercial Property Insurance for Pharmacies

The dedicated building or commercial space you rent, lease, or own for a pharmacy business might get destroyed or damaged. Building repair or reconstruction is never cheap, so get commercial property insurance.

By the way, don’t think that this policy is useless if you run an online pharmacy because you still need to cover the warehouse where the drugs and other products are stored.

You use commercial property insurance to cover building repair or reconstruction costs. This insurance will provide the money for such a purpose if your pharmacy gets damaged or destroyed due to:

• Fire

• Theft

• Vandalism

• Civil commotion

• Riot

• Sinkhole collapse

• Volcanic action

• Lightning

• Winds

• Hail

• Storm

• Snow

• Impact

• Vehicle

• Falling objects

Aside from the repair or reconstruction of the building, you can also use commercial property insurance to replace drugs and other products in your stock or inventory that get damaged or lost due to the perils we mentioned.

Commercial property insurance does more for your business. Most underwriters include the following additional benefits in this policy:

• $2,500 coverage for outdoor installations such as fences, trees, antennae, and signs

• $5,000-$10,000 coverage for in-premises or off-premises property

• $10,000 coverage for accounts receivable

• $10,000 coverage for lost income due to computer breakdown

• $2,500-$5,000 coverage for interrupted utility services

Inland Marine Insurance for Pharmacies

Consider getting inland marine insurance as a stand-alone policy or floater to commercial property insurance if your pharmacy operates in more than one location and products or equipment need to be moved between stores.

On its own, commercial property insurance doesn’t grant reimbursement or provide a replacement for your pharmacy’s products and equipment that get lost during a trip.

This is the reason why you get inland marine insurance. Inland marine insurance kicks in when products and equipment get lost during transportation because of:

• Auto accidents

• Theft

• Error of your employee or shipping carrier

• Mysterious disappearance

• Malicious mischief

• Lightning

• Fire

Equipment Breakdown Insurance for Pharmacies

Equipment breakdown insurance is useful if you’re running a compounding pharmacy. After all, there is much equipment to be insured such as applicators, dispensers, capsule machines, balances, and more.

By having equipment breakdown insurance, you can cover the cost of repairing or replacing drug compounding equipment that get lost or damaged because of:

• Fire

• Theft

• Operator error

• Electrical breakdown

• Mechanical breakdown

• Electrical surge

• Electrical shorts

You can get equipment breakdown insurance as a stand-alone policy that might provide $50,000 or more. Nonetheless, purchasing this as a floater to general liability insurance or commercial property insurance is the most convenient option.

Commercial Auto Insurance for Pharmacies

Commercial auto insurance is very helpful if your pharmacy owns and uses a commercial vehicle to deliver products to customers or take drugs and other products to other business locations and partners.

There are different types of coverage included in the policy wording of commercial auto insurance. But in a nutshell, this insurance does the following on behalf of your pharmacy:

• Provide a minimum of $25,000 coverage for bodily injuries and $15,000 coverage for property damage that results from an accident your commercial vehicle caused

• Cover a portion of or all of the expenses for parts repair or replacement if your pharmacy’s commercial vehicle got damaged because of a collision, fire, theft, vandalism, weather, and other covered perils

• Cover the medical treatment of the driver and passengers if the commercial vehicle got involved in an accident that an uninsured/underinsured driver caused

• Reimburse expenses if you need to hire a commercial vehicle while the commercial vehicle of your pharmacy is being repaired

Workers Compensation Insurance for Pharmacies

Running a pharmacy is impossible without employees. And when you employ people, the law requires you to get workers' compensation insurance.

Workers' compensation insurance kicks in when an employee sustains an occupational disease or injury. You use this to cover the following expenses:

• Surgeries, EMT services, and other expenses for medical treatment

• Hospital bills

• Medication

• Rehabilitation and retraining

• Lost wages

• Funeral expenses and allowance to dependents in case of death

Not getting workers' compensation insurance is punishable by state laws. Most will impose a stop-hold order, an accumulating fine, or a fine twice your pharmacy would’ve paid for workers comp premiums. In the worst case scenario, authorities might treat your violation as a felony or misdemeanor punishable by 6-month or 1-year imprisonment.

Employer’s Liability Insurance for Pharmacies

Your pharmacy’s workers' compensation insurance will come with employer’s liability insurance. Employer’s liability insurance kicks in when an employee sues your business for negligence after sustaining a work-related injury or disease. Your pharmacy enjoys these benefits from this policy:

• $1 million coverage when an employee files a claim for an occupational disease

• $1 million coverage when an employee files a claim for an occupational accident

Drugstore Insurance

The operations of a drugstore are smaller than that of a pharmacy. And so, insurance companies underwrite tailored coverage for these businesses although they can be insured under a pharmacy insurance package.

Drugstore insurance consists of a general liability policy, commercial property policy, employee dishonesty insurance, and professional liability insurance.

The general liability insurance for drugstores has a $500,000 per occurrence and aggregate limit. And since drug stores sometimes sell food, insurance companies include foodborne illness coverage.

Commercial property insurance, on the other hand, has a $25,000-$50,000 minimum limit. Finally, the professional liability insurance of this insurance package has a $1 million limit.

Pharmacy Liability Insurance Cost

Expect to pay $52.58 per month or $630.96 per year for a $1 million general liability insurance. This pharmacy liability insurance cost estimate assumes that you have 5 employees and make $500,000-$750,000 per year. Here’s a table showing the estimated rates of carriers you might want to try: