By Taylor Richardson, CRPS®, AIF, Financial Advisor
There are two primary reasons dentists need to be sure they are adequately protected by insurance. First, dentists generally have to take on a large debt load to get established. The other reason is that dentists are more prone to injuries or health problems due to the nature of their work, which could have an impact on their ability to earn an income.
Whenever I discuss insurance, I always make the point that the ultimate goal is to be able to self-insure and eliminate the cost of monthly premiums. Until then, you need coverage in place to avoid unnecessary financial risks.
In our last blog we talked about personal insurance. This blog will discuss the different types of business insurance and the essential policies dentists should carry.
- Business Overhead Insurance – In the event that you qualify for disability insurance, business overhead insurance covers all of the expenses of your practice until you either recover or sell the business. It pays for things like rent or mortgage, utility bills, employee salaries, payroll taxes, accounting fees – all the fixed expenses required to keep your practice going. Depending on the policy, it might even include the cost of bringing in a dentist to treat patients until you’ve recovered.
- Property and Casualty Insurance –These policies protect small business owners from a wide range of losses. In the case of natural events such as a fire or earthquake, property insurance protects the property owner against damage to the building, furniture, and equipment. The casualty component kicks in if you’re found legally responsible for an accident that causes injuries to another person or damage to another person’s belongings. If someone trips in your office and breaks an arm, you’re covered. If a patient’s car is hit while it’s in your parking lot, you’re covered. You may be tempted to look for the lowest premium you can find but that can generate its own financial risks if the coverage is limited. For instance, if your policy reimburses for cash value versus the actual replacement costs and you need to replace everything in your office, you may be on the hook for a sizeable sum to cover the difference. My advice is to opt for a policy that guarantees replacement.
- Renter’s Insurance – One of the factors that makes dentistry more expensive to get into than other professions is the high cost of dental equipment. If you are paying rent for your office space, you should have renter’s insurance to cover the costs of replacing the equipment.
- Data Breach or Cybersecurity – Your computer is a portal to all kinds of potential problems. In the event of a hack, all of your patient’s confidential information including their social security number, birth date, etc., could be breached. That information is easily used to create false identities or access new credit cards. If a data breach on your system has financial repercussions, you could be held 100% liable.
- Malpractice – You need to protect your practice, employees, and assets against allegations arising out of dental treatment or services. These policies typically cover the cost of defense, settlement, or awards for damages resulting from professional liability lawsuits and claims.
- Worker’s Compensation – As an employer you are required to provide this insurance for your employees, which provides cash benefits and/or medical care for workers who are injured or become ill as a direct result of their job.
To Get the Best Deal – Get a BOP
A BOP is a business owner policy which rolls a variety of insurance policies together into one package. A BOP is a convenient way to meet all your insurance needs. It can include business overhead, property & casualty or renter’s insurance, as well as requisite policies like malpractice and worker’s compensation. By bundling everything together you can get a better deal than if you parcel out individual policies. You may even get some policies, such as cybersecurity coverage, thrown in for free.
For a modest fee, you can have an umbrella policy that provides coverage above and beyond each individual policy. Umbrella policies don’t cost much, but the coverage can be significant. For example, if you have malpractice coverage that goes up to $1M, the umbrella policy can extend that to $3M. It’s very inexpensive protection for coverage that goes beyond the limits of other policies.
When it comes to business insurance, there are lots of options. If you have questions about what products make sense for your practice, schedule a call with our team at Engage Wealth Advisors. We’ll discuss ways you can protect your business and your wealth.