Common Pharmacy Insurance Claims and How to Avoid Them

Running a pharmacy means managing risks that most retail businesses never have to think about. A wrong label on a script. A customer who trips on a wet floor. A break-in targeting Schedule 8 drugs. Each of these can turn into an insurance claim, and each one hits differently depending on what cover you have.

At Tank Insurance, we currently look after more than 50 pharmacy clients across Australia, covering everything from independent community pharmacies to Pharmacy 4 Less and Priceline locations. We see the claims that come through. We handle the notifications. And the patterns are consistent.

This guide covers the most common pharmacy insurance claims we see, what triggers them, and what you can do to reduce your exposure.

Key Takeaways:

• Dispensing errors are the most frequent professional claim for pharmacies - report incidents to your broker immediately, even near-misses
• Pharmacies need at minimum three covers: PI for dispensing errors, public liability for customer injuries, and a business pack for property and theft
• Most pharmacies pay between $2,000 and $4,000 for a business pack, with PI premiums typically ranging from $1,500 to $5,000
• Document everything with photos, written accounts, dates and times - the more detail upfront, the smoother the claim

What are the most common pharmacy insurance claims?

Pharmacy claims generally fall into two categories: professional liability (mistakes in dispensing or advice) and property or business interruption (physical damage, theft, or injury at your premises).

Here’s how they break down based on what we see across our pharmacy portfolio:

Claim Type	Policy That Responds	How Common?
Dispensing errors	PI (Medical Malpractice)	Most frequent professional claim
Incorrect dosage advice	PI (Medical Malpractice)	Common, especially with OTC queries
Customer injury (slip/trip)	Public Liability	Regular, especially during wet weather
Break-in or theft (incl. Schedule 8)	Business Pack	Periodic, depends on location
Stock damage (water, fire, power failure)	Business Pack	Seasonal spikes
Property damage (storm, burst pipe)	Business Pack	Location dependent

The professional claims are the ones that keep pharmacy owners up at night. And for good reason. A dispensing error that causes a patient harm can escalate quickly.

How do dispensing error claims work?

Dispensing errors are covered under your professional indemnity insurance, which for pharmacies is typically written as a medical malpractice policy. This covers claims where a patient alleges they were harmed by a mistake in dispensing, labelling, or advice provided by the pharmacist or pharmacy staff.

These are claims-made policies. That means the claim (or the incident that could lead to a claim) needs to be reported to the insurer during the policy period. If you become aware of a potential issue and don’t notify your insurer until after the policy has lapsed or renewed with a different provider, you could be left without cover.

We recently handled an incident notification for a pharmacy client where a potential medication interaction was flagged by the patient’s GP. No formal complaint had been lodged yet, but the pharmacist called us to ask what to do. Erika on our team notified the insurer immediately, and that notification is now on record. If a complaint comes later, the pharmacy is covered.

That’s the difference between having a broker and going it alone. The pharmacist knew to call us first, and Erika knew to lodge the notification before waiting to see if anything came of it.

Common dispensing error scenarios that trigger claims include:

• Wrong medication dispensed - the most straightforward and most serious
• Incorrect dosage on the label - can cause under or overdosing
• Failure to identify drug interactions - especially with multiple prescribers
• Wrong patient - dispensing a script to the wrong person
• Compounding errors - incorrect formulation or concentration

What property and theft claims do pharmacies face?

The second major category is claims against your business pack policy. This covers the physical side of your pharmacy - the premises, contents, stock, and any loss of income if you can’t trade.

Pharmacies are a unique theft target because of controlled substances. Break-ins targeting Schedule 8 medications (eg opioids) happen, and they’re not like a standard retail break-in. The damage is often worse because thieves need to get through safes or secure storage, and the stock itself is regulated, meaning replacement involves compliance steps beyond just ordering more.

Based on our portfolio, business pack premiums for pharmacies typically range from $1,000 to $10,000 annually depending on the pharmacy’s size, location, what’s covered, and security setup. Most of our pharmacy clients sit in the $2,000 to $4,000 range.

Property claims we see from pharmacies include:

• Break-ins and theft - forced entry, smash and grab, internal theft
• Water damage - burst pipes, roof leaks, flooding from adjacent tenancies
• Fire or electrical damage - fridges, air conditioning, electrical faults
• Stock spoilage - fridge or freezer failure affecting temperature-sensitive medications
• Glass breakage - shopfront windows, display cabinets
• Storm damage - particularly for pharmacies in shopping strips with older roofing

We’ve managed business pack claims for pharmacy clients involving water damage from neighbouring tenancies - water coming through ceilings overnight, damaging stock, fittings, and dispensary flooring. In those cases, the business pack covered the property damage, stock loss, and temporary fit-out costs while repairs were completed.

What does public liability cover for a pharmacy?

Public liability insurance covers claims where a third party (typically a customer) is injured or their property is damaged because of your business operations.

For pharmacies, the most common PL scenarios are:

• Slip and fall - wet floors, mats that bunch up, cluttered aisles
• Falling displays or shelving - products falling onto customers
• Automatic door incidents - doors closing on customers, especially elderly shoppers
• Allergic reactions to testers - if your pharmacy offers skincare or fragrance testers

PL claims are usually covered as part of your business pack, bundled with your property and contents cover. Some pharmacies also have standalone PL policies, particularly if they run health clinics or vaccination services from the premises.

The key thing with PL claims is documentation. If a customer is injured in your pharmacy, record what happened, when, who was involved, and take photos if possible. Don’t admit fault. And call your broker before lodging anything with the insurer - how you describe the incident matters.

We covered this process in detail in our guide on how to make an insurance claim.

How much does pharmacy insurance actually cost?

It depends on the pharmacy’s size, turnover, location, and claims history. But based on what we see across our portfolio of 50+ pharmacy clients, here are typical ranges:

Cover Type	Typical Annual Premium
PI (Medical Malpractice)	$1,500 - $5,000
Business Pack (property, contents, stock, PL)	$1,000 - $10,000
Combined (PI + Business Pack)	$2,500 - $15,000

These are indicative ranges only. Most of our pharmacy clients pay between $2,000 and $4,000 for their business pack, but a larger pharmacy with high stock values, multiple locations, or Schedule 8 holdings will sit higher. A small compounding pharmacy in a medical precinct with no prior claims will sit lower.

Factors that affect your premium include:

1. Annual turnover and revenue - higher revenue generally means higher premiums
2. Number of pharmacists and staff - more staff, more professional risk
3. Location and security - alarm systems, CCTV, safe storage for controlled drugs
4. Claims history - prior claims or notifications increase premiums
5. Type of services - vaccination clinics, compounding, and dose administration add complexity

How can you reduce your pharmacy’s claim risk?

You can’t eliminate risk entirely, but there are practical steps that reduce the likelihood and severity of claims.

Professional risk

• Double-check dispensing protocols - many errors happen during busy periods or shift changes
• Use dispensing software properly - don’t override interaction warnings without documenting the reason
• Train all staff on notification procedures - if something feels wrong, report it to the pharmacist in charge immediately
• Keep records of all advice given - especially for OTC recommendations where there’s no script trail
• Stay across AHPRA requirements - your registration obligations include maintaining competence and managing risk, and your insurer expects you to meet them

Property risk

• Review your security - CCTV, alarm systems, and compliant Schedule 8 storage all matter for claims and premiums
• Maintain your premises - fix leaks early, service fridges regularly, keep electrical systems up to date
• Check your sum insured annually - fit-out costs and stock values change. If your sum insured hasn’t been updated, you could be underinsured when you need to claim
• Have a business continuity plan - know where you’ll operate from if you can’t trade from your premises

Notification habits

• Report incidents early - even if you’re not sure it’ll become a claim, tell your broker. With claims-made policies, timing matters
• Document everything - photos, written accounts, dates and times. The more detail you provide upfront, the smoother the claim
• Don’t wait for a complaint - if you know a dispensing error occurred, notify regardless of whether the patient has raised it

Frequently Asked Questions

What insurance does a pharmacy need in Australia?

At minimum, pharmacies need PI (medical malpractice) insurance for dispensing and advice errors, public liability for customer injuries, and a business pack covering property, contents, stock, and theft. Many pharmacies also carry management liability and cyber insurance depending on size and setup.

Does professional indemnity insurance cover dispensing errors?

Yes. PI for pharmacies (often called medical malpractice) covers claims from dispensing errors, incorrect dosage advice, drug interaction failures, and other professional mistakes. It’s a claims-made policy, so the claim must be reported during the policy period.

How much does pharmacy insurance cost in Australia?

Based on Tank Insurance’s portfolio, PI (medical malpractice) premiums typically range from $1,500 to $5,000 annually, while business pack premiums range from $1,000 to $10,000. Most pharmacies pay between $2,000 and $4,000 for their business pack. Actual costs depend on turnover, location, staff numbers, and claims history.

What’s the difference between a pharmacy business pack and standalone policies?

A business pack bundles property, contents, stock, glass, theft, and public liability into one policy. Most pharmacies use a business pack for premises risks and a separate PI (medical malpractice) policy for professional liability, as these are typically underwritten by different insurers.

Should I notify my insurer about a near-miss dispensing error?

Yes. PI insurance is claims-made, so if a complaint arises later and you haven’t notified your insurer during the relevant policy period, you may not be covered. If there’s any chance a dispensing error could lead to a complaint, notify your broker immediately.

Need cover for your pharmacy?

If you’re running a pharmacy and you’re not sure your insurance is set up properly, or you’ve had an incident and need to make a claim, we can help.

Tank Insurance looks after more than 50 pharmacies across Australia. We handle PI (medical malpractice), business packs, and the claims process when things go wrong.

Call us on 02 9000 1155 or email [email protected].

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This is general information only and does not take into account your objectives, financial situation, or needs. You should consider whether the information is appropriate for you and read the relevant Product Disclosure Statement (PDS) before making any decisions about insurance products.