Pharmacy owners face more than just the daily challenges of running a business — they also manage serious liability risks that can cost six figures or more if not properly insured. From dispensing errors to HIPAA violations, one oversight in your insurance coverage can mean the difference between a covered event and a personal financial loss.

That’s why it’s essential to periodically audit your pharmacy insurance policies. Below is a quick checklist to help identify potential gaps and ensure your business is fully protected.

1. Malpractice Exposure Checkpoints

Even the most cautious pharmacist can face claims of negligence, improper counseling, or dispensing errors. These claims can result in both civil liability and professional board actions.

Key Questions to Ask:

• Does your policy include Professional Liability (Malpractice) coverage specific to pharmacy operations?
• Are you covered for dispensing errors, misfills, or incorrect dosage instructions?
• Does your policy extend to pharmacist counseling services, including medication therapy management or advice?
• Does your policy cover technicians and part-time staff, or only licensed pharmacists?

If your professional liability policy only covers you as an individual, your pharmacy entity could still be exposed to lawsuits. Make sure both are insured.

2. Cyber Liability Under HIPAA

Pharmacies handle sensitive Protected Health Information (PHI) every day. A single ransomware attack, lost laptop, or unauthorized access could trigger HIPAA violations, fines, and notification costs.

Audit Your Cyber Coverage For:

• Breach response and forensic investigation costs
• Regulatory fines and penalties under HIPAA
• Notification and credit monitoring for affected patients
• Business interruption losses caused by cyberattacks
• Third-party claims if patient data is exposed to vendors or partners

If your cyber policy excludes “employee error” or doesn’t include HIPAA liability, your pharmacy may still face six-figure costs even with coverage in place.

3. E&O Scenarios Most Policies Miss

Errors & Omissions (E&O) insurance protects against claims not caused by bodily injury or property damage — which means it fills gaps your General Liability policy won’t.

Common Scenarios:

• Incorrect labeling or advice causing medication misuse (without physical injury)
• Delays or miscommunications with healthcare providers affecting prescriptions
• Data entry errors in patient systems or insurance billing software

Review whether your E&O coverage extends beyond dispensing to include documentation, claims processing, or communication-based services.

4. Business Owner’s Policy (BOP) Exclusions You Should Know

A Business Owner’s Policy typically combines property, liability, and business interruption coverage. But many pharmacy owners assume “everything is covered” when in reality, standard BOPs exclude several critical risks.

Check for Exclusions Related To:

• Prescription errors (requires Professional Liability coverage)
• Pollution or contamination (important for compounding pharmacies)
• Equipment breakdown (for refrigeration units and dispensing machines)
• Spoilage due to power outage or mechanical failure
• Cyber-related losses — many BOPs exclude these entirely

Ensure your BOP includes spoiled inventory and refrigeration loss extensions, and confirm that coverage limits align with your current property value and stock levels.

Why This Matters

Pharmacy insurance isn’t just about compliance — it’s about protecting your license, livelihood, and reputation. One uncovered exposure can lead to devastating losses, legal action, or downtime that permanently impacts patient trust.

By conducting an insurance risk audit every year, you can:

• Identify and close dangerous coverage gaps
• Adjust limits to match current business operations
• Ensure compliance with HIPAA and state board requirements
• Reduce premium costs through proactive risk management

Ready to Audit Your Coverage?

Even well-insured pharmacies can miss critical protections. The good news? It only takes a few minutes to identify where you might be at risk — and it could save you thousands in the long run.

Don’t leave your pharmacy exposed.

Call Defy Insurance Agency at 877-780-4626 to get a free quote or schedule a policy review call today.

Defy Insurance Agency — helping pharmacy owners protect what matters most: their patients, their practice, and their peace of mind.