The 5 Key Types of Cover for Your Practice

Specialist Financial Adviser Magdelena Harding shares her insights into the key types of cover for business protection for dental practices.

Owning and running a dental practice brings many rewards, however at the same time it comes with a large amount of responsibility and potential risks. Many practice owners are busy people, operating and managing a business, caring for their patients and offering a high level of service whilst at the same time making time for family and social activities. Understandably, this level of demand, can result in some aspects of business planning not getting the attention they require, and this may include choosing the most appropriate business cover for your practice.

1. Bespoke cover for dental practices

Dental practice insurance can offer peace of mind in the event any unexpected issues should arise. Having the right amount of cover in place can ensure that your business is protected against risks such as damage to the premises, malfunctioning equipment or contractual disputes, amongst other things.

It’s important to choose the most appropriate type of cover for your practice – a good insurer will offer bespoke cover, specifically designed to meet the needs of your business. This means that you will not be paying for protection that isn’t necessary, whilst at the same time making sure you are not underinsured.

Keeping your policy updated

Throughout the year, many practices acquire new equipment or changes to security systems for example, it is important to let your insurers know about any such changes so that your policy can be updated in line with these. If you do need to make a claim but have not updated your policy to include any new purchases or changes to the building, these may not be covered.

2.Partnership protection

Many practice owners are in partnerships, sharing the responsibility of a substantial loan and the responsibilities of running the business with a partner, may be a more viable option. However, having a comprehensive partnership agreement in place with a plan and cover for all eventualities where needed, is an essential part of running a practice.

Critical illness and death are topics that most people find uncomfortable and often prefer not to discuss; however difficult the conversation may be, it is important to think about what would happen if this were to affect a practice partner, how would this impact the business? In the case of the death of a partner, it is likely that their estate, including the dental practice, would be left to their family – it is also unlikely that this family would have experience running a dental practice or even the desire to take over management and may very well wish to withdraw their share of the value from the practice. Therefore, unless you and any remaining partners have the financial resources to buy them out, this could potentially have a devasting effect on your business. This is where having the right agreement and partnership protection insurance in place, is vital. This type of cover is typically paid out as a lump sum benefit, that in the case of the death of a partner, would allow you to buy out their share of the practice whilst providing the right level of compensation for their family.

Types of partnership protection

Life of another cover

This type of cover is designed for a practice with two partners. Each partner would take out a life of another policy on the other partner – meaning that the surviving partner would have the financial means to buy the remaining share of the business.

Own life cover

This is suitable for a practice with more than two partners. In this case, each partner takes out their own policy and pays their own premiums. The benefits of the policy are written in trust for the other partners and a lump sum payout can then be used to buy out the deceased’s share of the business.

3.Key person insurance

A key person describes a member of staff who is crucial to the financial success of the business – it may be a dentist with a specific skill set in cosmetic dentistry or implants, or a practice manager – someone with a high level of responsibility for the daily running of the organisation, for example. Protecting yourself against the loss of key employees, in the event of critical illness or death, is important if your dental practice relies heavily on key individuals to bring in business.

Key person insurance is designed to provide cover for this and is typically paid out as a lump sum to protect your business against the financial impact of the loss of a key member of the practice staff. How much key person insurance your practice will need depends on a number of factors, such as the size of the practice, and the people you employ.

4.Protecting your income

There may come a time in any of our lives that an illness, injury or other type of life changing event can render us unable to work, creating a significant impact on our professional lives and on our finances. For dentists, hiring someone else to cover their position if they are unable to work for whatever reason, can put a huge dent in their pocket and rapidly eat away at any savings, especially so if cover is required on a long-term basis.

Whilst taking out income protection is a good way to ensure that regular outgoings are covered, it may not be enough to cover the cost of hiring a locum. Locum insurance is designed for this purpose – to make sure that there is a regular income to allow your business to continue operating in your absence by paying for someone else to carry out your workplace duties and to cover the ongoing expenses that you are usually responsible for.

5.Dental indemnity cover

There may be a time in your dental career that as a practice owner you face claims of malpractice or negligence. Many dentists are already aware of this possibility and purchase cover from medical defence organisations (MDOs), however, most MDOs will only provide cover on a discretionary basis. This means that in the event of a malpractice claim, they may decide not to get involved, leaving you to settle the claim from your own pocket.

This is where dental indemnity insurance can be very useful. There are different types of cover available, which vary depending on the individual requirements of your practice.

Some key considerations include the following:

Vicarious liability – a policy that provides vicarious liability will allow you to extend your cover to other members of staff in your dental practice both clinical and non-clinical, such as practice managers, dental nurses, hygienists, receptionists and so forth, offering protection against any employee accidents or errors that could potentially put your business at risk.

Regulatory defence fees – you may want to think about purchasing cover for regulatory defence fees such as GDC complaints and hearings or criminal proceedings, unexpected cyber-attacks (security and data breaches) and the costs of court attendance.

A specialist financial adviser will be able to offer expert advice on the most appropriate type of cover for your dental practice.

To discuss your business protection needs in more detail, speak to a Specialist Financial Adviser at Wesleyan Financial Services as part of a no-obligation financial review by visiting  https://www.wesleyan.co.uk/insurance/dental or call 0800 316 3784.

About Magdelena Harding

Magdelena is a Specialist Financial Adviser at Wesleyan Financial Services, supporting dentists, their families, and their practices with financial planning to secure their financial future.

Wesleyan Financial Services Ltd (Registered in England and Wales No. 1651212) is authorised and regulated by the Financial Conduct Authority. Registered Office: Colmore Circus, Birmingham B4 6AR. Telephone: 0345 351 2352. Calls may be recorded to help us provide, monitor and improve our services to you.