Business Insurances You're Probably Not Thinking About

00:00:00 Hi, it's Dr. Weitz. Thanks so much for joining me for this episode of the Private Medical Practice Academy. Today I wanna talk to you about insurance. No, not whether you should take insurance in your practice, but rather, what insurance does your practice need to purchase? Basically, you wanna protect yourself from various risks and liabilities. Insurance is one of those things that you never want to need to have or to use,

00:00:28 but unfortunately, life happens and having insurance can save you. Some types of insurance are pretty obvious, like medical malpractice. We all know that you need medical malpractice of some sort, but there are also a whole bunch of insurance types that I'm sure you haven't thought of yet. Just because you haven't thought of them or maybe don't even know that they exist,

00:00:52 doesn't mean that you don't need them. So let's briefly touch on malpractice. I'm sure that if you're listening to this podcast, you already know that you need medical malpractice insurance. How much malpractice insurance you need is going to be defined by your state. And there are different types of medical malpractice insurance typically either claims based or currents based. You might even choose to be self-insured.

00:01:41 However, one of the most important points is that you must also have a malpractice insurance policy that covers your practice and its employees. This is above and beyond having your own malpractice insurance policy. Yes, you need to have a malpractice policy for each individual physician. You may even have a policy for each individual mid-level. You need a policy for your practice,

00:01:48 kind of like an umbrella policy, so that the entire practice in all of its employees are covered. Because your own individual malpractice insurance doesn't cover a mistake made by an MA who calls in the wrong thing if she does it independent of you. So this is an easy thing to obtain. You wanna talk to your malpractice insurance broker about it frequently. It's either free or it's low cost to add onto your existing policy.

00:02:19 If you're looking for more detailed info on how to choose the right malpractice insurance, be sure to check out the podcast episode I did with Jennifer Wiggins. What I really want to talk about is more the business related insurance policies. Let's start with general liability insurance. This covers your practice from claims of property damage or bodily injury that can arise from accidents on your premises or as a result of your day-to-day operations.

00:02:46 For example, if a patient or even a visitor slips and falls in your waiting room and in turn has some kind of bodily injury claim against you, this general liability insurance can protect you. Or another example, a piece of medical equipment could malfunction and cause property damage. Recognize that your practice doesn't have to be at fault for you to get sued. These policies usually include legal fees for defending you against the claim,

00:03:16 regardless of whether you win or lose. Recognize general liability insurance can provide financial protection for your practice and its assets. Without this insurance, you are responsible for paying out of pocket, and so you may actually not have the funds to cover the legal fees and whatever damages you end up having to pay. So the cost of the general liability insurance is negligible compared to what the potential cost could be to your practice.

00:03:47 I also wanna point out that general liability insurance can cover certain types of personal injury claims, such as allegations of slander and defamation by the practice or its employees. Next, workman's compensation insurance. Pretty much every state requires workman's compensation insurance to cover your employees in case they're injured on the job. You should be able to get this from the same broker who quotes you your general liability insurance.

00:04:16 To that end, it's really important to find a broker who can really craft a bundle of all of the insurance types that I'm going to talk to you about. You're also going to wanna ask about employment practices liability insurance. Now, I know that's a mouthful, but this can type of insurance can protect your business from claims of discrimination, harassment, and wrongful termination brought by employees.

00:04:40 Just like any business, medical practices are subject to various employment laws and regulations. For example, a job applicant can claim that they weren't hired because of their age, their race, their gender, and in turn have a discrimination claim against the practice. Similarly, an employee could claim that they were subjected to harassment or discrimination by a supervisor or a coworker or you,

00:05:07 the owner. Even the most well-intentioned employers get sued for alleged violations of these laws. So you don't have to do the wrong thing to have somebody decide to make a claim against you. Even when you do everything great, there's always that potential. Now, without employment practices liability insurance, your practice may be responsible again for paying the legal fees and the damages in case of a lawsuit resulting from these claims.

00:05:38 I can't stress enough to you that the legal fees are a big deal. So even if you end up not having to pay any damages, if you don't have this insurance, you have to pay the legal fees out of pocket. So usually the cost of this type of insurance is negligible compared to the potential cost of those legal fees. Needless to say,

00:05:59 you need to have policies and procedures in place to prevent these type of claims from arising in the first place because that's going to be really the backbone of any defense you're gonna have Then, because as medical practices, we handle store and share sensitive patient data electronically, you are at significant risk for a cyber attack. So one of the absolute must-haves is cyber liability insurance.

00:06:26 Cyber liability insurance covers a variety of expenses, including notification and credit monitoring for patients affected by a data breach, legal fees and defense costs in case of a lawsuit resulting from a cyber attack. Cyber extortion costs such as ransom payments in case of a cyber attack, loss of income that can result from that cyber attack because it could potentially disrupt your business operation.

00:06:53 And then public relations expenses to rebuild the practice's reputation after a cyber attack. Listening to the news, you hear frequently about data breaches and cyber attacks and ransomware, and they always seem to be targeting big companies. In reality, that's not necessarily the case. They can target your medical practice and this can be a huge expense. And from personal experience, I will tell you that the cost of the cyber liability insurance is really pennies in comparison to what the potential risk here is.

00:07:28 Couple of caveats though, cyber liability insurance policies vary widely in terms of coverage deductible and exclusions. So it's really important that you understand your needs and have that conversation with the insurance professional who is helping you put together this package. Also, having cyber liability insurance does not take the place of implementing strong data security measures and employee training programs. The insurance obviously doesn't prevent cyber attacks,

00:07:59 nor does it cover all of the costs associated with one of these attacks. So whatever you can do to minimize the risk on the front end, the better off you're going to be. One of the best nice to have policies I personally have ever benefited from is business interruption insurance. Business interruption insurance covers lost income and expenses like rent or mortgage payments, utilities and salaries.

00:08:28 If you're forced to temporarily close or suspend operations due to an unexpected event such as a natural disaster or pandemic. When we had to close for Hurricane Katrina in 2005, and then again for Hurricane Gustav in 2008, our business interruption and insurance covered tens of thousands of dollars in lost income. You don't have to have a natural disaster to be impacted. However,

00:08:49 unexpected events such as a fire or a flood can damage your space and equipment forcing you to close for repairs. You know what, then you don't have revenue, but you still have ongoing expenses and you may even have potentially more expenses. Of course, we also don't have to look any further than covid. A pandemic or government mandated shutdown can force your practice to close for an extended period of time.

00:09:12 Without business interruption insurance, you may not have the financial resources to cover the lost income and your ongoing expenses. And for all of you who are like, oh, but the government might rescue us, well, you know what? Other than covid, the government hasn't rescued anybody or hurricanes, tornadoes, or anything else if your business is affected. So business interruption insurance,

00:09:35 again, negligible cost, huge benefit. And then I wanna talk to you about something on a personal level. I know that you've heard the story about how you need disability insurance to cover your lost income. Having personal disability insurance is important independent of whether you're an employed physician or a practice owner. However, owning your own practice or being a partner in a practice where you're responsible for all or part of the overhead,

00:10:02 carries its own set of issues. Being disabled, even short term can be financially disastrous. Why? Because you don't have the income, you don't generate the revenue, but you're still responsible for the expenses. So how do you solve that problem? Business overhead expense, disability insurance. Yeah, another mouthful. This type of insurance can cover operating expenses such as rent,

00:10:28 utilities, and employee salaries. Even if you or a key employee is disabled and unable to work without this type of insurance, you're gonna need to have significant reserves, and even then, you may not be able to cover all of your operating expenses during a period of disability. Now, obviously, if you are the sole owner and you develop a long-term disability,

00:10:54 you may decide to just close the practice, but this is not instantaneous, and your expenses will still be ongoing until you do close the practice. In reality, though, most disabilities are short term, maybe you go skiing and break your leg, or you have an ACL tear and you need to have surgery and you can't go to clinic for some amount of time,

00:11:19 or you're a surgeon and you can't operate and all of a sudden you are on short term disability. This type of insurance is going to give you that safety net to cover your business expenses so you don't have to have financial frustrations and ruin while you're short term disabled. In the end, I would strongly encourage you to find an insurance professional who can help you assess all of your business insurance needs,

00:11:47 including the types that I've described here, and develop a comprehensive plan for you. I think that You, you will find that the cost is minimal relative to what you are protecting and what it could cost you. If you don't have these types of insurances, please be sure to sign up from my newsletter below, I'll be sending you tips on how to start a practice,

00:12:08 grow a practice, and then add multiple services so that you can maximize your revenue.