Insurance 101: Understanding Your TDIC Policy

Most dental professionals, especially new graduates, aren’t aware of the types of policies they need or the conditions and exclusions they contain. After all, you should be an expert at crowns and caries, not claims and coverage terms.

The Dentist Insurance Company is here to help policyholders like you be comfortable and confident when it comes to your coverage. The insurance basics that follow are intended to aid you in reading and understanding your policy as well as speaking with experts about what’s right for you.

Understanding types of professional insurance

As dental professionals, there are several types of insurance policies to consider. While the needs of each dentist and practice depending on practice size, type and location, the following are the main categories of coverage.

Professional liability: Also known as malpractice insurance, this insurance offers protection for legal obligations arising from claims of wrongful or neglectful practices for licensed dentists. Claims stemming from dental-related injuries are common and these lawsuits can wreak havoc on your business, regardless of the outcome of the case.

General liability: This type of policy is considered essential for the financial well-being of your dental practice as a business. It offers protection from claims of nondental-related injuries such as slip- and-fall injuries, third-party property damage, advertising injury, hired and non-owned auto, and fire and water legal liability. While not required by law, many commercial leases require tenants to carry general liability coverage.

Commercial property: This type of coverage protects your dental office and its contents, whether you own your business, your building or both. Lessor’s risk and business owner’s policies are two different types of commercial property insurance.

Business owner’s: This type of insurance covers the contents of your dental practice, including equipment and tenant improvements, should they be damaged or destroyed by events such as fire, water or theft. Cyber Suite Liability protection can be added to protect you from a wide range of data breach and cyber incidents and related litigation.

Lessor’s risk: This covers dental or professional buildings you own, regardless of whether you practice there, including loss of rental income.

Workers’ compensation: This policy covers workplace-related injuries to employees, providing medical care and compensation to employees hurt in workplace incidents. It is required by law in most states.

Employment practices liability: This policy covers any civil damages, defense costs or settlements resulting from certain violations of labor laws brought against an employer by an employee, including discrimination, harassment or wrongful termination.

Understanding required and recommended policies

There are three factors to consider when determining which policies to purchase: whether you are a practice owner, a practice owner with employees or an independent contractor.

Practice owners need both general liability and professional liability policies. While not required by law, general liability insurance is typically mandated in lease agreements to protect the building in the event of a loss. If you own your building as well as your business, you also need commercial property coverage.

In most states, including California, dental practice owners who are employers are required to carry workers’ compensation insurance, regardless of the number of staff members. Some states allow exceptions based on the type and number of employees and hours worked. A Workers’ Compensation Law – State by State Comparison can be accessed via the National Federation of Independent Business legal resource library at nfib.com/content/legal-compliance.

For independent contractors or those who work as associates in a practice owned by someone else, both general liability and professional liability policies are recommended. Independent contractors can also purchase an optional workers’ compensation policy for themselves, but it is not required. Note that the independent contractor classification is largely dependent on federal and state tests. In California, the Employment Development Department (EDD) provides a comprehensive Employment Determination Guide (DE 38) that contains a worksheet to help make a lawful status determination. Download the guide and other forms and publications for California employers at edd.ca.gov.

Understanding how coverage differs among insurers

Claims-made coverage

When it comes to your professional liability insurance, it’s important to know under what terms and timelines your insurer must respond to claims. TDIC offers claims-made and reported coverage, which means that your policy provides coverage for claims when both the alleged incident and the resulting claim happen during the period your policy is in force. Your coverage remains in force so long as you continue to pay premiums for your initial policy and any subsequent renewals. Each succeeding year the policy is continuously renewed, your coverage period is extended.

Extended reporting periods

Tail coverage is an extended reporting period endorsement offered by insurance carriers to provide protection for claims made after your claims-made policy is canceled or expires. This coverage is important because there is often a delay between when dental incidents occur and when the alleged injuries appear and the subsequent claim filed. Although claims can be made after the policy expires, the incident must have occurred within the coverage period. Tail coverage ensures continuity of coverage for dentists who are moving to a new dental group or facility or moving to a new state where insurance requirements may differ.

Consent to settle

A consent-to-settle clause in a professional liability insurance policy requires the carrier to obtain approval from the insured prior to settling a claim. TDIC will never settle without your written consent. Some policyholders weigh the option of pursuing a case through litigation versus the time and expense of being away from their practice. In some instances, the settlement demand is within a range that is considered acceptable to the policyholder and TDIC, given all of the variables in a particular case. Standard release language also contains wording that states that the settlement is not an admission of liability. Know that settling does not equal an admission of liability; rather, it may be the easiest and most cost-effective solution as it avoids lengthy and expensive litigation.

Please call a helpful TDIC representative if you need assistance understanding any aspect of your policy.