Dental Office Package
As its name indicates, the dental office package insurance is designed to answer the complete needs of the dental office as far as damage insurance is concerned. This product being exclusive to Sogedent, you cannot obtain it through any other financial services firm.
An integral coverage Numerous additional benefits Amount of liability insurance Evaluation of your insurance needs Limitations: co-insurance clause, deductible and exclusions Prevention or risk-sharing Gross earnings insurance Consideration of the potential damage to others
An integral coverage
It groups together three types of insurance:
- building insurance, dental equipment and office contents;
- civil liability (non professional);
- business interruption insurance (optional).
Numerous additional benefits
We have added more coverages so that you can enjoy the peace of mind you need for the smooth practice of your profession.
- The exclusion regarding pressurized devices is ineffective with respect to compressors used in the dental office.
- Extension of coverage with regard to loss of earnings resulting from insured damages to off premises heat, power, gas or water supply.
- Land and water pollution clean up coverage.
- A limited pollution liability coverage, with a $50,000 limit of insurance and a $1,000 deductible.
Amount of liability insurance
Dentists whose office is located in a building which has other occupants would be well advised to take out a higher amount of liability insurance, in view of the physical damage that could be caused to the property of others, and the resulting loss of revenue.
That is why all our policies come with a minimum liability amount of $5,000,000. However, this amount can be increased, if necessary.
Evaluation of your insurance needs
1. Designation of the insured
Dentists who want to become owners of a dental clinic may do so in a variety of different legal forms: They may buy it in their own name and own a sole proprietorship, buy it with another dentist and form a general partnership, or run it as a joint-stock compagny, otherwise known as a company.
The names of all real owners must be specified. Accordingly, if a portion of the insured property belongs to one dentist (natural person, i.e. a sole proprietorship) and another portion belongs to his or her joint-stock company (legal entity separate from the dentist), both names must be mentioned in the insurance contract.
In fact, if you forget or fail to declare that a portion of the property belongs to the joint-stock company and that the contract is drawn up in the dentist's name only, the insurer may refuse to pay for damage caused to the property belonging to the joint-stock company, as it is a separate legal entity from the dentist.
Furthermore, the insurer could refuse to defend the interests of the joint-stock company in the event of legal proceedings.
If allowed by the insurer, a clinic owner may have the names of dentists not associated with him or her added to the contract as owners of the office (e.g. dentists paid on a commission basis) if he or she wants their property, civil liability and income loss to be covered by his or her policy in the event of a loss.
Dentists who work on commission or are independent may also take out a separate contract.
In that case, the insurance coverage will need to be evaluated and perhaps adjusted to cover the interests of all those who may incur a financial loss if the clinic is damaged.
2. Coverage for the content, of any kind, inside or outside your office
Covers office contents, dental equipment, instruments, machinery and supplies, waiting room furniture computer and, for tenants, money spent on physical renovations to the building—usually called leasehold improvements.
We suggest you pay special attention to the following elements:
a) Financing
If some or all of the purchase of your office is insured by the lender, you should consider adding the value of the financed assets to your dental office package insurance once the loan is paid off as well as insuring the assets that were not financed.
b) Acquisitions
Be sure to increase the amount of your insurance immediately when you make significant purchases, for example a CEREC machine, and periodically with respect to less expensive acquisitions; otherwise you may find yourself under-insured.
c) Replacement value
Since your insurance pays the replacement cost of your assets when you submit a claim, you should occasionally evaluate the replacement value of all your assets—including leasehold improvements—with the help of your suppliers, so that the coverage provided by your policy is sufficient to fully replace them.
d) Taxes
Don’t forget to add the taxes to the replacement value because they are reimbursable in a covered claim, unless you have the option of requesting a reimbursement from Ministries of Revenue.
e) Valuable papers and records
This insurance covers losses or damage caused to patient files and other valuable papers and records in the office.
Accounting books and records, patient files and other case records (x-rays, microfilm and microfiche) are usually considered "valuable papers and records".
With Sogedent's insurance plans, dentists can offer to redo their patients' examinations and x-rays and even rebuild their files if they have been destroyed by a covered loss. The maximum amount of compensation is $100 per active file (according to the insurer's calculaton method). This benefit is rarely found in the contracts offered by other insurers.
To determine the amount required for this coverage, you must multiply the number of acive files by the unit cost of a file. For example, you can evaluate the replacement cost of the paper ofr 1,000 files at $10 per file, plus $30 for the examination to be redone and $40 for the x-rays, which give you $80,000 of insurance coverage for 1,000 files.
f) Other factors to consider
Also pay close attention to the following elements:
- Accounts receivable documentation (when the accounting system is destroyed and the names of clients with balances owed are lost). Meticulous management of copies of the accounting system and client records, whether on paper or electronic, is essential.
- The rental value in the office lease. In other words, are you required by the lease to continue to pay the rent even if the office is destroyed?
- Additional fees, or the cost of setting up somewhere else, or the fees of professionals who help you ascertain the value of your losses (usually accounting fees).
Criminal offences, including:
Losses or deterioration of money in a night depository safe or theft at the residence of a deposit bearer, forgery of a money order or bank notes, depositors forgery. You must evaluate and insure yourself according to the maximum amount of money or securities that can be stolen in one incident.
Misappropriation: this is coverage for the loss of property, especially money and securities, which you may suffer due to acts of dishonesty committed by one or more of your employees. Some exclusions apply, including losses attributable to dishonest acts or criminal misdemeanors whose author or accomplice is an insured, such as the dentist owner or one of his or her associates. There is also an automatic exclusion if an employee commits a dishonest act and you or one of your associates know about it, whether perpetrated inside or outside the office.
Fraud committed by an employee can cause losses much greater than your insurance coverage, which is why it is important to take certain preventive measures in order to avoid this type of loss.
Limitations: co-insurance clause, deductible and exclusions
1. Co-insurance clause
It is a basic rule whose application must be clearly understood in order to avoid bitter disappointments. It was instituted many years ago and can be found in the overwhelming majority of insurance contracts intended for businesses. Its goal is to discourage insureds from resorting to underinsurance in order to save on premiums under the pretence that the overall risk of loss is minimal.
Thus, under the co-insurance clause, the insured is penalized if the insurance coverage taken out according to special conditions is lower than a certain percentage of the real or replacement value of the insured property on the day of the loss. The insured is the co-insurer, since he or she shares the cost of the damage with the insurer. The insurer insures a portion of the value of the building and the insurer the surplus.
Example:
| Replacement value of the building | $500,000 |
| Co-insurance clause | 80 % |
| Insured amount | $300,000 |
Repair cost before depreciation | $50,000 |
Calculating the compensation: Amount of insurance multiplied by the loss and divided by the coverage required:
$300,000 X $50,000 = $37,500
$500,000 $ X 80 % = $400,000
The insurer will pay only $37,500, and the insured will have to meet the other $12,500 of damage. The insurer covers 75% of the amount of the loss, which is the proportion of the coverage out of 80% of the replacement value of the building ($300,000 vs $400,000).
It should be noted that the higher the rule (the maximum being 100%), the greater the penalty if the coverage is severely lacking.
2. Deductible
The deductible is the amount that the insured agrees to pay in case of a loss. You should choose it based on the amount you can pay. Find out about discounts, since some insurers are more generous than others. Furthermore, a deductible of $1,000 is often the one that offers the best discount based on the risk assumed by the insured.
There is another factor that argues in favor of a higher deductible. You take the small losses yourself and, by keeping a totally or nearly clean record, you maximize the insurer’s interest when you request a quote and, furthermore, you benefit from their preferred rates.
You have to know that even if your claim is small, the cost of settling the loss is great for the insurer (investigation fees: travel by appraisers, creation of your file, payment verification and approval, cheque issue, data entry, etc.).
3. Exclusions
In all risk policies, there are around twenty exclusions. Reading this section of your policy will hardly take you a half an hour, while the consequences of not reading it could translate into months of additional work to compensate for the financial loss resulting from an uncovered loss.
Most of these exclusions cannot be ignored, but some are adaptable to specific situations. That is why it is essential to talk about it with your broker so that he or she can find the solution that suits you or at least suggest ways to reduce the impact of the exclusion to you.
For example, the direct or indirect consequences of statutory provisions concerning zoning, demolition, reparation or construction of buildings and hindering restoration are excluded. By submitting the regulations concerning your building to the insurer, it is fairly easy to obtain coverage adapted to your situation.
Suppose that your city issues a regulation that buildings located in a given sector that are 50% or more destroyed cannot be reconstructed or repaired, but demolished instead. If a fire destroys 60% of your building insured for $100,000, the insurer will pay you $60,000. As the rest of the building will be demolished, you will lose $40,000 unless you have taken out a special rider providing for the payment of additional compensation required in accordance with statutory provisions.
Prevention or risk-sharing
Preventing loss significantly affects your control over insurance costs.
Alarm systems for theft and fire, smoke detectors, water sensors and solenoid switches connected to main water inlets, hand extinguishers, emergency exit signs and lights activated in case of power outages are definitely some ways to reduce the number and the cost of eventual losses. They will also help you avoid impromptu closings that irritate your clientele and can cause you to lose some of your goodwill. This investment will be profitable for you in the long run.
If you take physical protective measures, you will assume a higher deductible (which means sharing the risks with insurer) and benefit from the resulting premium reductions, in addition to related discounts for various methods of protecting your clinic.
Gross earnings insurance
This insurance covers a loss of gross earnings as the result of the interruption of activities in your office. The premium depends on your annual gross revenue, i.e. your annual billing from which you must deduct any portion of income paid to a dentist working on commission. Such dentists can insure their own lost income, if the insurer allows, for an additional premium.
This coverage maintains your financial situation so that it is as if your office hadn’t been closed. In addition, the insurer will not pay costs that have ceased during the disruption of your activities, or services (example: laboratory charges) that will eventually be billed to clients.
Consideration of the potential damage to others
1. Legal liability
Article 2396 of the Civil Code states that the purpose of liability insurance is to cover the insured against the monetary impact of the obligation that could fall on him, due to a harmful event, to repair the damage caused to another.
Since it costs a lot to defend yourself, the insurer will defend all insureds in case of a lawsuit, whether they are liable or not, for reasons stipulated in the contract.
Dentists whose offices are located in a building with other occupants would be wise to take out a greater amount of legal liability insurance than the basic $1,000,000 included in most contracts, considering the material and bodily injury caused to others and the resulting loss of income.
To choose an adequate amount, you must plan for the worst possible situation. For example, if you estimate that 20 other occupants are likely to be affected by a fire that breaks out in your dental office, and a claim of $200,000 per occupant could result from it, you will need at least $4,000,000 in coverage, plus an amount to cover bodily injury, which comes to a total of approximately $5,000,000.
2. Tenant liability
This is the amount necessary to compensate the owner of rented offices for the damage for which the insured is responsible. Any damages incurred by adjoining parts to the rented premises are guaranteed by the civil liability coverage.
3. Employee benefits liability plans
This product protects dentists from the monetary impact of mistakes or negligence committed in the administration of fringe benefits for the dentist’s own personnel (for example, forgetting to cover an employee who has become eligible for the group insurance of the office in accordance with his or her contract of employment).
4. Personal injury and advertising liability
This product covers the injury involuntarily caused to the reputation of another. It should be noted that insurers now exclude the injury caused through a Web or Internet site or e-mail.
5. Pollution risk
This risk is excluded from most insurance contracts. Sogedent offers you coverage limited to a basic amount of $50,000 to cover the effects of pollution caused involuntarily by the insured.
6. Liability resulting from the use of data
The insurers now exclude the consequences of erasing, destroying, corrupting, leaking and misinterpreting data, including all resulting losses of use.
For example, you must be very careful (and ask your staff to be very careful) when you send an e-mail that may contain a virus (without you knowing it of course). A third party could sue you for damaging their operating system and the resulting loss of income.