Modern Healthcare, Modern Risks: What Providers Need to Know About Liability Coverage in 2025

With the introduction of useful tools like Artificial Intelligence (AI), the healthcare industry has experienced significant growth. Not only has it expanded telehealth access, but it is also fueling other sectors, such as the medspa industry. These developments seem to bring better patient outcomes and more efficient care. However, they also introduce new risks, leaving businesses vulnerable to these threats.  This blog breaks down what today’s providers need to know about healthcare liability coverage in 2025, so you can stay protected, compliant, and informed.

According to the American Medical Association, one out of three physicians has faced a lawsuit. As care models progress, this number is further expected to rise. Which is why you must ensure that your insurance coverage reflects today’s challenges. 

AI in Healthcare: Efficiency or Exposure? 

Medical practices regularly use AI. According to a 2024 AMA study, 66% of physicians use AI tools, increasing from 38% in 2023. These tools assist practitioners with documentation, diagnostics, case prioritization, and even treatment suggestions. Does this make them risk-free? Let’s see. Let’s take a few examples: 

• Ambient listening tools violate HIPAA if patient conversations are not properly secured.  
• Diagnosis support tools could easily misclassify conditions if not reviewed by humans, leading to delayed or even improper treatment.  
• Automation without oversight could increase liability if AI suggestions are followed without a thought. 

Examples shared above pose quite the risk, and if you’re using AI, your broker must know exactly how it’s being used and what safety protocols are in place for it.  

Medspas: A $17 Billion Industry and Blurry Boundaries 

The medspa sector is growing rapidly, offering everything from fillers and peels to off-label weight loss treatments like semaglutide and tirzepatide. But the industry is ahead of regulation in many areas, and this opens doors to serious liability issues. 

Some of the major risks are: 

• Unlicensed procedures leading to lawsuits. 
• Use of compounded medications after they’re no longer FDA-listed as “in shortage,” which could violate compliance rules. 
• Misleading advertising, especially when using brand names without permission, could trigger legal action. 
• Lack of SAM (Sexual Abuse & Molestation) coverage, particularly concerning for services like massage or waxing. 

Cybersecurity & Telehealth: New Tools & New Threats 

Healthcare ranks to be the top target for cyberattacks. In 2024 alone, 92% of U.S. healthcare IT professionals reported at least one cyber attack. Many of these involved accidental data exposure from new tech like ambient listening devices.  

Telehealth, which is a permanent part of healthcare delivery, also presents risks. As practitioners treat patients across state lines, they are more exposed to regulatory headaches and potential coverage gaps if licensure and malpractice policies don’t align.  

Good Clinical Practice is Still The Way to Go 

Even though technology has changed healthcare delivery, the truth remains: clear protocols, licensed professionals, and strong oversight are essential to managing risk and protecting your business. 

Questions Your Broker SHOULD Be Asking You to Make Sure You’re Protected Fully: 

A good broker will not only ensure you but also ensure & educate you against all odds. This includes asking important questions like: 

• How are you using AI? 
  Are decisions reviewed by a licensed professional? What privacy protections are in place? 
• Do your insurance applications clearly explain your use of technology? 
  Are you showing how it’s part of a structured, risk-managed process? 
• Are you prepared for a cyberattack? 
  When was the last time you reviewed your Cyber Liability coverage and exclusions? 
• Do you treat patients across state lines via telehealth? 
  Are you licensed in every state you serve? 
• For medspas: Who performs your procedures? 
  Are they properly licensed? Is there a medical director in place? 
• Are you offering compounded medications like semaglutide? 
  Do you monitor FDA rules and sourcing guidelines? 
• What’s your advertising strategy? 
  Are you referencing brand-name medications without authorization? 
• Do you have SAM (Sexual Abuse & Molestation) coverage? 
  If your business offers massage, waxing, or similar services, this coverage is crucial, even if no claim has ever been made. 

Make sure you’re working with the right broker, as that is the beginning of everything.  

Shayne Bevilacqua, MBA, TRA, is a licensed insurance agent and the Principal of PLIG and BIG. With a focus on healthcare liability coverage in 2025, Shayne works closely with providers to ensure their insurance evolves with modern risks, from AI to medspas to telehealth.