Malpractice Insurance

Professional Liability (Most commonly referred to as Malpractice Insurance):

Malpractice Insurance is the most important insurance a dentist/dental specialist needs to carry. This is not just because it is required by the state but also because it is sometimes the one thing that can protect a doctor’s license and reputation.   

Why You Need it & How it works

Most Malpractice companies say that about 1 in 3 dentists/dental specialists are sued throughout their lifetimes. With that being said there are a few important considerations to be made when designing your plan.

1. Only work with a company with an A or higher financial rating.
These ratings determine how healthy an insurance company is. Groups such as AM Best and Moody’s are great bench marks to determine if a company has enough assets to protect you. If they are less than an A rating they are most likely not in the best place to cover a multi-million-dollar lawsuit for a doctor. Even if they can withstand a few of these you need to consider that if 1 in 3 dental professionals can get sued throughout their lifetime then you want the company to be able to withstand a number of financial hits in any given time. No one wants a company with poor financials when protecting themselves in a lawsuit.
2. Pure Consent to Settle : (This is a clause built into your carrier's contract)

The most important part of malpractice is to protect you when a lawsuit occurs. No matter how much money an insurance company has, the important thing is that their business model works to protect the insured instead of extort them. At the end of the day an insurance company is a business and business want to make money. With that being said, if an insurance company can settle a claim for 5k or fight the claim for 50k they normally want to pursue the less expensive option. Pure Consent prevents this conflict. It does not allow the insurance company to settle a claim without the handwritten consent of the insured. If a claim is settled a few things can affect the insured that are not normally considered at first thought.

  1. You may have to present the case to the dental board. They can then examine the situation. Since settling is admitting fault they can choose to suspend, take away or restrict your license.
  2. The case is logged into the National Practitioner Database: . Here any prospective and current patients can see the settlement and it could lead to more lawsuits from people that end up second guessing your work or end up pursuing a less risky practitioner.
  3. Just like car insurance this can drastically increase your rate. Losing a lawsuit makes you high risk. Most carriers drop you after a settlement and to be insured by a credible company could cost upwards of 10k-20k a year just to work.. Or even worse you have to go to a high risk carrier and get lesser coverage for triple the cost.

This is the most important insurance you can possibly buy. Never cut corners or try to take the easy road on malpractice sometimes paying an extra $100-$300 a year can be the difference on whether or not you can achieve your goals or successful grow your practice/client base. Your reputation is on the line and that is priceless.

3. Type of Coverage: Occurrence Versus Claims Made

Companies will try and sway you on one of these two different options for designing your malpractice. Some companies only offer one option or market a blanket answer on what is best. There is no best answer/option on this as there are crucial situations to go in either direction. The best answer is to educate yourself on the job opportunity with a financial advisor who specializes in dental malpractice coverage and knows the different risks presented with General Dentists, Advanced Dental, Cosmetic Dentistry, Community Health, Dental Faculty, Pediatric Dentistry, Oral and Maxillofacial Surgeons, Periodontists , Endodontists, Prosthodontists and Orthodontists.

An Occurrence Plan: Covers you for the year the incident/treatment occurs. These plans are typically more expensive but when you purchase the plan you now will forever have coverage with those limits for that year. This is crucial for high risk dental (PEDS, OMS, Implants and Cosmetic Dentistry). Doing high risk procedures or dealing with children (especially since they can sue you until their 18) normally leads to much higher lawsuits averaging much higher than the norm. Having multiple policies broadens the amount of coverage for your whole career and sometimes it is great to have 20 to 30 policies hedging the risk instead of just one big one. Also Occurrence is best for corporate jobs as they normally include an exit fee if you do not setup a policy this way.

Occurrence provides the most coverage but is not always necessary just make sure to have an expert assess the situation and never just go off of an employer or insurance company recommendation.

A Claims-Made Plan: Covers you from start to finish with one set of limits for your whole career. This is best for those practicing under less risk as the average lawsuit/need for coverage is less and there is no point to over-insure if you are not in a position to ever need the coverage. The downside with Claims-Made is there is a fee (known as a Tail) that must be paid if you plan to close up your coverage and not retire. It is only effective if you plan to be 1099 or an owner/work at a location long term. If done appropriately it can save upwards of 20-40% a year in cost especially in states/counties that are deemed high risk and already are surcharging on the price. Some states like FL, CA and NY are so expensive for coverage that this is normally the most cost effective route for dental professionals.

Early on in your career it is generally better to go Occurrence and then consider switching later once your road-path is more established. As always just make sure you are receiving advise from an unbiased expert and they will guide you best on what makes the most sense for your current situation and goals.

4. Explaining the numbers:
On every policy / contract that requires malpractice you will see two numbers generally like this : 1,000,000 / 3,000,000 or 2,000,000 / 4,000,000 or some other set of numbers. The first number is your amount of coverage per lawsuit. The second is the total amount of coverage for the policy if you are sued multiple times. So you would get in the first example 1 million dollars per lawsuit with a cap of 3 million dollars for the life of the policy. Different risks should have different limits. Orthodontist and bread and butter dentists generally carry lower limits and Claims-Made plans while PEDS, OMS and high risk dental carry higher limits and generally use an Occurrence plan to broaden the risk.

Normally you want higher limits for Claims-Made and lower for Occurrence but it just depends on the state you work in and the requirements of the employer. There is normally a minimum required by the state but sometimes employers encourage or require higher limits to ensure Dental Professionals are optimally covered.

We’re Here For You

Professional Liability can be a tricky thing to purchase. Here at CFS Dental Division we have Teams of dedicated experts whom comb through all of the qualified/endorsed options to make sure your plan is designed appropriately for whatever your situation may entail.

The leader in helping Dental Professionals protect their future and achieve financial independence.

CFS Dental Division