It’s important for physicians to think beyond malpractice when they consider risks to their career and practice.
When physicians think about buying insurance they tend to focus on medical liability coverage, and understandably so: It’s the largest premium they’ll pay and it applies to the risk that usually worries them the most.
But doctors can overlook other types of insurance that can be just as crucial to protecting their assets and livelihood—coverage for everything from fire and hacking to employee theft. In some states, certain forms of coverage are required by law, a mandate of which practices might be unaware.
Insurance needs vary from practice to practice and not every practice needs every type of coverage, but here is a guide to some of the common forms, recommended by insurance and tax experts.
Regulations vary from state to state, but many require small businesses with more than a certain number of employees to provide workers’ compensation coverage. This covers medical expenses and a portion of lost wages for employees who become ill or injured on the job. Coverage can also include employee rehabilitation and death benefits.
The Employment Retirement Income Security Act sets rules and standards for private sector employee benefit plans, such as 401(k)s, and the people that manage and invest their assets. ERISA requires that fund managers be covered by a fidelity bond to protect the plan from losses due to fraud or dishonesty. The coverage is specific to a practice’s retirement plan with the amount of required coverage at the lesser of $500,000 or 10 percent of plan assets. A bond typically last three years and can cost less than $500.
This protects against claims for bodily injury and property damage arising out of operations, premises, and products. These policies are often required by landlords as a condition of leasing.
This covers damages to buildings, so a practice would obtain this type of insurance if it owns its own building. But even if a practice leases space, it needs this insurance to protect against loss of medical and office equipment, fixtures, and furniture due to theft, fire, water damage caused by broken pipes, etc.
Property insurance often is bundled with general liability in a business owners policy (BOP).
Premiums depend on a variety of factors, including the size, age, and condition of the building; value of the contents; whether the building has fire sprinklers etc. A typical policy for a small practice might cost about $2,000 a year.
This is a relatively new form of insurance, but it’s becoming a necessity, even for practices that might think they’re too small to attract hackers. It covers losses and damages resulting from patient data being stolen, exposed, improperly shared, or held for ransom. It covers deliberate actions, such as hacking or ransomware, as well as accidents, such as a lost laptop containing unencrypted patient information or a coding error that exposes patient data.
A comprehensive policy will cover paper records as well, since so much information is still stored in physical files. It also should include first-party and third-party coverage. First-party coverage pays for damages suffered by the policy holder while third-party coverage compensates for damages caused to others by the data breach, such as legal costs incurred from lawsuits filed by affected patients.
Malpractice and general insurance policies often include some cyber coverage, but usually not enough.
When shopping for cyber insurance, be sure the carrier is required to provide a comprehensive range of assistance in event of a breach, such as paying regulatory penalties, hiring IT experts to find and fix the breach, hiring attorneys to defend patient lawsuits, and paying ransom to free hijacked data.
This provides income in the event that a practice cannot function or bring in revenue for a time because of an event like a fire or natural disaster. It’s different from property insurance in that it covers lost income.
No practice likes to imagine misconduct from an employee, but it happens. Experts advise practices to have every employee who handles money, whether cash or credit card payments, be bonded because “you never know when theft is going to raise its ugly head.”
This policy protects a practice if it’s sued for such things as discrimination and sexual harassment. Coverage protects the physician owners as well as claims against the staff, such as an HR manager. A 10-person practice might pay $1,500 a year for a $1 million policy.
This coverage comes into play if a physician or other significant revenue generator is disabled and unable to bring in money. In that case, the policy replaces that income. This is particularly important for smaller and solo practices where the loss of one physician could threaten its existence.
Any policy should define disability as a physician no longer being able to work as a physician, rather than as complete disability. That is to prevent an insurer from denying a disability claim if a physician could do a different job.
This provides medical, disability and, sometimes, life insurance for employees and owners. While these types of coverage are not always required by law it is difficult, if not impossible, to attract employees without offering them as benefits.
If an owner or employee uses company or personal vehicles to perform any sort of task related to the practice, such as making bank deposits, delivering lab samples, or picking up supplies, the practice could be held liable in the event of an accident. A commercial auto insurance policy can protect the practice. One way to avoid needing this coverage is by using couriers, taxis, or ride-share services.
It might seem with all these policies that a practice wouldn’t need any additional coverage, but experts recommend an additional policy to guard against catastrophic awards that exceed the limits of other coverage.
These umbrella policies, so called for the way they shelter everything beneath them, typically add an additional $1 million in coverage. They can be written to cover a range of claims and cost roughly $500 a year for $1 million in coverage.