BY LORI SICHTERMANN
A businessman once told me, ‘You insure what you cannot afford to lose,’ ” notes Robert E. Varner, DMD, president-elect of the American Association of Orthodontists (AAO).
Virtually anything the mind can fathom has the potential to be insured. Professional athletes have policies for their limbs, while artists insure their work, instruments, and even their ideas. Homes, autos, office structures, and all of the contents within fall under the enormous umbrella of items to be insured.
With so much worth preserving, the process of purchasing and paying for insurance can be a stressful and time-consuming roll of the dice. Yet, beyond the paperwork, the fine print, and the premiums, insurance provides a unique sense of security against life’s pitfalls.
“Personally, I think of it as a way to protect myself and my family against very costly unfortunate circumstances, such as long-term health battles or hospitalizations, as well as car accidents, injuries, or death,” says Jason M. Hartman, DMD, MS, Spark Orthodontics, Bethlehem, Pa.
“We know we need insurance to help reduce the risk, but we hate to pay for it because it seems to be expensive for something you may never need. We are always asking ourselves how much coverage do we need, and which risks we want to insure against.” Brent E. Larson, DDS, MS
For an orthodontist with one or more practices, there are a lot of moving parts that have to be considered when looking to create that proverbial peace of mind through insurance coverage. Items such as the size of the building or the materials used in its construction have to be considered. But it doesn’t end there. When deciding on insurance coverage, details like whether or not there is a fire sprinkler system in their office or whether or not there are multiple floors in the building have an impact on the policy. And beyond the bricks and mortar, one has to consider all the contents in that building when obtaining a quote for insurance.
And Varner points out that what you cover has to go beyond that. “Not only do we need coverage for the building and its contents, but we also need insurance for the patient’s records—in case they need to be recreated because of fire or water damage. Also, with so many patients going through our office, liability for falls, etc, is important.”
It’s for these instances that facility insurance is all but mandatory for business owners today. Depending on the policy specifics, facility coverage usually includes the replacement of equipment and supplies that are damaged or lost due to fire, flooding, wind damage, etc. Essentially, this coverage is similar to a homeowner’s policy, but pertinent to the office setting.
How much insurance you require depends on whether you own or lease the property, and what equipment and technology you want to have covered under the policy. According to the American Dental Association (ADA), the best course of action when considering a facility plan is to evaluate what the cost would be if you had to replace everything, including the actual office if you own it.
Covering Your Assets
Ask anyone who’s ever sought and bought insurance coverage for themselves, their property, or their business, and they will tell you that signing on that dotted line can feel like a high-stakes gamble.
“We know we need insurance to help reduce the risk, but we hate to pay for it because it seems to be expensive for something you may never need,” says Brent E. Larson, DDS, MS, a member of the AAO Board of Trustees, Midwestern Society of Orthodontists. “We are always asking ourselves how much coverage do we need, and which risks we want to insure against.”
For orthodontists, coverage in 2014 means going beyond life, disability, professional liability (malpractice), and property/general liability insurance. According to Larson, today’s landscape now includes business overhead insurance, employment practices liability, and one of the most talked about areas of coverage: cyber liability insurance.
“We are trained to straighten teeth, not make insurance decisions.” Jason M. Hartman, DMD, MS
Regardless of whether your practice is a high-tech operation or a low-key setting, if your business has a website, it’s vulnerable to a number of devastating issues, from the effects of privacy violation or the infringement of intellectual property to virus transmission. This is where purchasing cyber liability insurance comes in. Most carriers provide the coverage, which takes into account first-party (cyber liability) and third-party (cyber crime expense) risks associated with gathering and storing confidential information digitally.
As explained by Forbes, the types of coverage needed to protect a business against the effects of hackers—which includes the compromising of private information from customers or employees—is not typically covered under the standard liability insurance policy. As business owners, it’s important to understand your potential legal exposure in the event of an attack on your practice’s IT system.
Large, high-profile companies may appear to be at the greatest risk for cyber intrusion, but small- to-medium-sized businesses are not immune. Forbes reports on a study conducted by the US Secret Service and Verizon Communications Inc that found more than 72% of all data breaches that occurred in 2012 happened in small- to medium-sized businesses. What’s more, the study revealed that the average cost of a security breach came to an estimated $5 million.
Medical-related businesses that host data, such as patient birthdates, social security numbers, and medical records, are at a high risk for cyber infringement. The Chubb Group of Insurance Companies, Chicago, a global property and casualty insurance firm, notes that, in most cases, having cyber insurance covers direct loss, legal liability, and consequential loss resulting from cyber security breaches. Many of the policies available today also will provide businesses with an online network security risk assessment that reports on the company’s web exposures.
“Today, cyber liability insurance is something that should be considered by orthodontists,” says Gayle Glenn, DDS, MSD, president of the AAO.
Another hot-button issue among orthodontists today is the fact that many of the large insurance providers are just that—too large. Having insurance is a cost of doing business, but, as Varner explains, that cost should equal some return.
“Insurance agents don’t seem to want to ‘work’ for the premiums we pay anymore. Work to me means reviewing all my policies yearly to make sure I don’t have any holes in my coverage, that I am fully protected, and that I am receiving coverage at the best possible rates.”
Thus, practice owners are charged with finding the right fit when it comes to insurance carriers and the policies they provide. As every practice is different, so are their needs for coverage.
“Cost of insurance and the type of insurances we carry is always something to be aware of, both personally and professionally,” Hartman adds. “Finding one company to manage all of these different insurance products has been difficult for me, and as such, I’ve been forced to find multiple insurance salespeople to help me get the coverage that I need.”
Regardless of whether your practice is a high-tech operation or a low-key setting, if your business has a website, it’s vulnerable to a number of devastating issues, from the effects of privacy violation or the infringement of intellectual property to virus transmission.
While some may share Hartman’s strife with trying to find the most competitive prices for maximum coverage, there are a number of orthodontists who have been well-served by the same insurance provider (large or small) for decades. Such a lasting relationship, as Varner explains, is the result of a delicate combination of reliance, flexibility, and compatibility. Not to mention, it’s a godsend when the time comes to make a claim.
“I have used a local, full-service independent insurance agent for most of my 40 years of practice for car, home, and office,” Varner says. “I realize that dental associations such as the Oregon Dental Association, the American Dental Association, and the American Association of Orthodontists have programs, but I have always felt that in the small town where I live, if I expect the insurance agents to bring their families to me, I felt I needed to do business with them.”
Glenn has had similarly positive experiences working alongside her provider for a number of years. “During my 26 years in private practice, I relied on a local commercial insurance agent to obtain business owner and property insurance and public liability coverage,” she notes. “For my employees, I carried workers’ compensation and employee practices insurance. I also carried a business income/interruption policy purchased from the ADA, which had very competitive rates and good coverage.”
Orthodontic professionals today can acquire coverage from any number of insurance carriers, ranging from the nationwide powerhouses to the localized independents. Yet there are organizations, such as the ADA and the AAO, that offer specialized coverage for folks in the industry. In these instances, the coverage is designed by dental professionals, which provides a unique understanding of exactly what types of coverage is pertinent to a dental or orthodontic office today.
For example, the AAO’s insurance products include life, long-term disability, long-term care, business owner’s insurance (property, casualty, general liability), and EPLI (employment practices liability insurance). The AAO even has an arm that supplies professional liability insurance, which is referred to as the AAO Insurance Company (AAOIC).
Medjet assistance also is included under the realm of AAO offerings. With this membership program, those who become ill or injured while traveling domestically or abroad have the option to be transported, without regard to medical necessity, to another hospital of their choice, even if the facility they are in is considered adequate. According to MedjetAssist, which provides the service, this area of insurance coverage is unique in that most other health and travel insurance plans and platinum card benefits state that a patient cannot transfer facilities unless it is medically required.
The ADA offers a similar suite of products as the AAO, which are targeted toward dental professionals and their practices. Products include income protection, office overhead expense coverage, and MedCASH—a supplemental medical insurance that provides policyholders with cash benefits. An individual would use a service such as MedCASH assistance for paying for emergency department visits or outpatient surgery, as well as being paid in one lump sum in the event of diagnosis, and subsequent treatment, of a critical illness.
Peace of Mind
Understandably, there are generalities and overlap in the services provided by insurance carriers, both big and small. However, it’s the area of professional liability insurance that orthodontic professionals say is best to have tailored to fit around a specific practice.
According to the American College of Physicians, understanding the difference between claims-made and occurrence-made insurance could mean the difference between adequate protection of your assets and personal bankruptcy.
“When I talk to my colleagues, the most upsetting events in a practice lifetime are accusations of malpractice,” Larson says. “This accusation causes enough anguish and loss of sleep by itself, but if you have to worry about your malpractice insurance coverage, it makes it even worse.”
Regardless of the policy provider, Glenn notes that it’s pivotal as business owners to consider the policy limits, consent to settle provisions, and fully understand whether the policy is claims-made or occurrence-made—the two most common types of malpractice insurance.
According to the American College of Physicians, understanding the difference between claims-made and occurrence-made insurance could mean the difference between adequate protection of your assets and personal bankruptcy. Claims-made protects a physician from malpractice claims only if the insurance company is the carrier at the time of the alleged “occurrence” and at the time the claim is filed in court. In some instances, a physician will switch from one insurance carrier to another because of a change in jobs or practice location. If the claim is filed in court in the interim, or after a new policy is acquired from another carrier, the doctor is not covered, unless he or she purchases “tail” insurance, which covers the gray area.
With occurrence-made insurance, however, the process is a little more straightforward. The insurance coverage will be seamless, regardless of job or location changes.
No one ever said that running a business was easy. And, while insurance exists in an effort to protect a business, the people associated with that business, and the equipment they use, selecting the right kind of coverage at the right price may seem overwhelming at times. But, know that you’re not alone in the navigation. Organizations such as the ADA and the AAO are a good place to start as their representatives best understand the needs of their peers.
“We are trained to straighten teeth, not make insurance decisions,” Hartman says. “I feel that a good insurance representative will sit with you and explain the product options, answer questions, and help guide you to the right decision for your needs for now and into the future.” OP