by Sponsored Content: Risk Strategies
By Kyle Wallace, Managing Director, Risk Strategies, & Herb Ford, Vice President, Business Development, Risk Strategies
When a dental practice expands to multiple locations, its approach to insurance coverage must evolve accordingly. The structure and design of the coverage plan will require careful consideration and while the process differs from insuring a single practice, it does not need to be complicated.
For a single-location practice, most dentists secure three primary insurance policies:
- Professional liability (PL): Also known as malpractice coverage, this policy covers the actions of the practice owner and staff, with the practice entity named as an additional insured.
- Businessowners policy (BOP): Includes property, general liability, embedded employment practices liability (EPL), and data breach/cyber liability coverage. While commonly used, the cyber liability limits in a BOP are often insufficient even for a single practice. A separate data breach and cyber policy should be considered.
- Workers’ compensation (WC): Protects employees in the event of work-related injuries or illnesses.
When a dentist opens a second location, often under a new legal entity name, the typical approach is to replicate this coverage. A new BOP and WC policy are purchased, ideally, mirroring those of the first practice. Associate dentists may be required to carry their own PL policies, and the practice owner may ask the associate to add the entity name as an additional insured.
On the surface, this approach may appear to have addressed the risks, however, doing this immediately creates gaps and unnecessary complications in coverage. Additionally, the ownership team has surrendered a margin of control over the insurance protecting the practice.
As the practice continues to grow, this fragmented approach to insurance often continues. Each new entity secures its own set of policies thinking that each location is separate with its own legal entity. This further complicates the coverage structure. The same thought process exists concerning the PL policies for individual employees. Many associates are contracted to the practice and therefore are considered individual and separate, requiring their own policies.
Due to this piecemeal coverage, it is not uncommon to encounter expensive surplus lines PL policies insuring only the practice entities or excess liability umbrella policies with unnecessarily high limits sold to these practices. Multiple BOP polices can increase the risk of duplicate EPL or cyber coverage as standalone policy policies are often secured without addressing the coverage that already exists on the BOPs.
The patchwork approach creates gaps in coverage and makes it difficult to fully grasp how underinsured the practice might be in critical areas. In addition to insufficient coverage, this approach can result in practices spending more money on insurance than necessary. As the cost and administrative burden of managing numerous policies becomes overwhelming, the practice may seek the help of an insurance professional.
Partnering with a specialty insurance broker familiar with the unique risks of the dental industry will ensure the practice obtains adequate coverage at the appropriate cost. A specialist insurance broker can help streamline your coverage by creating a program built using one master insurance policy for every area of coverage. This means one comprehensive policy for:
- Professional liability
- Property and general liability
- Workers’ compensation
- Data breach/cyber liability
- Management liability (EPL, directors and officers (D&O), fiduciary, crime, etc.)
A master policy approach eliminates gaps in coverage, reduces redundancy, and provides a streamlined, cost-effective solution. It is scalable, easy to manage, and adaptable to the growth of the practice and an experienced insurance team will have the expertise to navigate the intricacies of coverage while making practice management easier. Take control of your practice’s insurance with confidence. Partner with the Risk Strategies Dental Practice to streamline your coverage, eliminate unnecessary gaps, and optimize costs. With our expertise in the dental industry, we’ll design a master policy tailored to your growing multi-location practice, ensuring comprehensive protection and simplifying management every step of the way. Learn more about how we can build a smarter, more efficient insurance program for your practice’s future.
