Malpractice insurance is obviously a must for every medical practice — but it might not cover every potential issue that could arise. It’s important for physicians to understand the various types of insurance available, whether medical or business-related, and determine whether the risk entailed is great enough to require coverage.
The medical side
Here are some types of medical insurance that practices may want to obtain:
Human resource malpractice. Employee allegations of discrimination, wrongful termination and sexual harassment aren’t uncommon. Coverage is available to protect physician owners of the practice, human resource managers and the employees who committed the wrongful acts. Basic coverage extends to damages awarded to the employee-plaintiffs in the matter, while separate coverage may be purchased for legal defense fees.
Misappropriation of sensitive patient information. The news media report frequently about the unauthorized taking or disclosure of sensitive patient data. The exposure of the information may be accidental (computer system failure) or committed by an employee or a nonemployee hacker (cyber breach, identity theft). In addition to providing the usual coverages (damages, legal fees), insurance policies may help affected patients recover from the incident by restoring their impaired credit.
The business side
Here are some types of business insurance that may be helpful for medical practices:
Employee theft. Insurance coverage for this risk provides protection if an employee steals or embezzles money or property from the practice. The theft of money may come from either accounts payable or accounts receivable. The minimum recommended base coverage is $100,000. The insurance carrier for this coverage (and many of these other coverages) should work with the practice to minimize the risk of an employee misappropriating practice assets.
Practice-engaged vehicles. Insurance protection is required for vehicles engaged
in practice businesses under two circumstances. First, the practice may own ―
and buy traditional insurance coverage for ― vehicles used by its physicians
and staff to carry out business responsibilities.
Second, it’s also possible that employees may occasionally use their own automobiles to make bank deposits, pick up medications and test results, and run other errands for the practice. To protect against injury to an employee or third party in this latter situation, it’s necessary to maintain nonowned auto insurance. The typical coverage limit is $1 million and limits coverage to specific business use of personal vehicles. (Use limits may be set forth in the employee handbook.)
Business overhead expenses. If a physician in a small or solo practice can’t work because of a disability or other problem, overhead expenses such as staff payroll, office rent and utilities will continue to be incurred. It’s possible to buy an insurance policy that will provide the cash flow required to cover these expenses, allowing the practice to continue operating. The policy is marked by a 30- to 90-day waiting period between the start of the disability and the initial benefit payment. Typically, this coverage will pay overhead expenses for one to two years.
Umbrella protection. This policy protects against claims that exceed the coverage limits on any of the other types of insurance that the practice may carry. It may also fill in policy gaps, such as legal fees incurred to defend claims against the practice. Typical coverage is $5 million to $10 million.
“Key employee” coverage. Life insurance and disability policies covering the lives and working abilities of practice members are essential to its ongoing success. Typical examples are the physicians and other employees who are sources of significant revenue.
Don’t take unnecessary risks with the welfare of your practice. Take the time to explore these different types of insurance and protect your long-term profitability.
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