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The LaMaster Law Firm Blog

Tuesday, July 18, 2017

Risk Management Tips for Dental Practices

The contemporary landscape for dental practices has become increasingly complex due in part to the legal and business risks many dentists face, not the least of which are medical malpractice claims and other lawsuits. One way to mitigate these risks is by obtaining the following different types of insurance. In many cases, if the dentist has borrowed money from a commercial lender to open the practice or is leasing his or her office, the lender or management company leasing the property will require some or all of these coverages as well.

General Liability

General liability insurance is designed to protect a business against claims brought by visitors who are injured on the premises in accidents that are not related to a dental procedure. Whether there are patients or vendors coming to an office, a business may be held liable for personal injuries. A visitor can trip on the walkway of the premises owned by the practice or be injured in a slip and fall accident on a spill in the office’s bathroom. In any event these claims are not covered under a medical malpractice policy. General liability insurance provides blanket coverage for a wide range of third-party claims.

Medical Malpractice

Although some states require dentists to carry medical malpractice insurance, medical malpractice claims are common. Without proper coverage, a practice will be forced to pay of of pocket to defend the case and settle the claim, which could prove to be costly and disruptive to the business. In short, medical malpractice insurance can cover the legal expenses and the cost of the settlement.

Commercial Property Insurance

For most dentists, equipment represents a significant investment which must be protected from unexpected events such as fires, floods and theft. The best way to protect this business investment is to purchase commercial property insurance as soon as the practice is launched.

Workers’ Compensation

Depending on the size of the practice, state law may require the business to purchase workers’ compensation insurance, even those who have only one employee. In sum, this is no-fault insurance that prevents the business from being sued by an employee who suffers a workplace injury. Instead injured workers receive compensation for their medical expenses and a percentage of their weekly wages. By failing to carry coverage, a business can face a costly lawsuit.

Business Overhead

Business overhead expense (BOE) insurance, also known as business expense Insurance, is an essential type of disability insurance to cover dentists in the event that they become disabled. Designed for practices that depend on a small number of individuals to produce income, such insurance takes care of the overhead expenses of running a dental office so that the office can remain in business even when one its primary practitioners is ill or injured. Business overhead expense insurance ensures that, during your period of disability, your rent, utilities, employees’ salaries, accounting expenses, etc. will be paid on a monthly basis.

There are three restrictions to BOE that should be noted: [1] there is a waiting period (known as an “elimination period” of 30, 60, or 90 days before the BOE kicks in [2] there is a maximum period of time that monthly payments will be made, typically 12, 18, or 24 months and [3] BOE does not cover the practitioner’s own salary.

Disability Insurance

Most dentists are unaware that people in their 20s have a one in four chance of becoming disabled before they reach retirement age, whereas their chance of dying during the intervening years is only one in six (for men) and one in nine (for women). Also, many professionals are surprised to hear that, according to statistics, most disabilities are not the result of catastrophic accidents, but rather caused by common chronic conditions like back pain. This means that it makes good sense to have disability insurance as well as life insurance. Also, while BOE benefits are paid for a limited period of time (at most a few years), disability insurance payments usually run to age 65, assuming the recipient can prove continued disability.

There are two types of disability insurance: short-term and long-term. Short-term policies generally replace 80 percent of the recipient’s gross income for a short period of time, such as during recovery from surgery or an accidental injury and only have a short waiting period. 

Long-term disability policies, on the other hand, cover a smaller percent of the recipient’s salary (usually 60 percent) beginning after the recipient has already missed an extended period of work (often 6 months). Nonetheless, long-term coverage can last for a very long time, in some cases for the rest of the recipient’s life. Both types of disability insurance have been established to protect beneficiaries and their families from the financial desperation that can result from unexpected incapacity.

Life Insurance

Life insurance, of course, has another purpose altogether. It provides a lump sum payment to survivors in the case of the practitioner’s death. Though very few people expect to die young, the reality is that some of us will, which makes having life insurance necessary to protect one’s loved ones from potential financial catastrophe.

The Takeaway

Having a successful dental practice requires not only attracting and retaining patients, but planning for unforeseen risks. By engaging the services of an experienced attorney with an understanding of the insurance market, you can better manage the legal and business risks facing your practice.





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