The Dentist’s Simple Guide to Mal-Practice Insurance

One of the first items you need as a practicing dentist before you touch a patient is malpractice insurance.  Though it is not a fun topic to discuss it is a necessary evil in order to protect your personal and business assets.  The company we have used (personally) in the past is MedPro.  They usually offer various discounts to graduating D4s that make malpractice insurance either at no cost, or at a very discount rate. (just depends on the year)  They also have a very good defense rate if you ever have a claim against you.

In order for you to apply for Mal-practice insurance, you will need an actual license number issued by the state.  In the state of Indiana, usually in the month of May it can take 3-8 weeks because of the backlog of graduating student.  Not only that, that same department has other responsibilities that delay the process further.  Hopefully, depending on your state, it will go faster than that!  However,  if you are a D4 graduating this year, you can go ahead and get everything set up before hand, and if you work with your specific carrier (Medpro in our case) you can back fill the dental license number.  My wife was issued her license on a Friday, she started work on Monday.  She had her Mal-practice insurance issued within 1 hour on Friday because we did the leg work before she had her license.  

The risks that dentists face when a patient sues them includes financial loss, loss of reputation, and in very rare occasions, jail time. The average malpractice claim against a dentist is $300,000.  Some of these are very large (millions) and some are smaller.

Two Types of Mal-Practice Insurances

The two types of Mal-practice Insurances that are out their are claims-based and occurrence based.  Generally speaking, you will want occurrence based malpractice insurance.  If you do not then it brings into discussion tail-coverage.  We wont get into that, just make sure you get occurrence based Mal-practice insurance, avoid claims-based at this point.

Major Features and What is Important

Since you now have determined to go with occurrence based Mal-practice insurance, what specific features do you need?  How much coverage?  Let’s dive in.

Under an occurrence policy, you have two coverage amounts.

1.)  Per Occurrence

2.)  Annual Aggregate 

Per Occurrence, is how much per law-suit that the policy will cover.

Annual Aggregate is how much per year multiple law suits will cover.

Example:  If you have a policy that covers $500,000 per occurrence and an Annual Aggregate Amount of $1,500,000, that means you can only have 3 law-suits up to $500,000 in damages per year.  If you have that many laws suits in a year, you are doing something wrong, and probably illegal but thats beside the point here.  

You want to make sure, that the Per Occurrence amount is high enough based on the complexity of the dental work you are performing.  If you are doing basic general dentistry you might have a lower amount here.  If you are doing more oral surgery and specialty extractions then you will want to increase this amount and the Annual Aggregate.

Also, depending on your state the amount of coverage recommended varies.  A claim in the mid-west is usually less expensive than those in New York or California.  Just like everything else, it depends on your personal career path and where you live.

Common Misconception *State Funds are not Malpractice Insurance*

Some states like Indiana offer programs that put a limit on the awards given to patients.  If a dentist participated in their state’s State Fund, any lawsuits brought against them have a limit on the amount of money that can be awarded.  Just to be clear, this is not in lieu of Malpractice Insurance.

Revisit your Policy as your Dental Career Expands

This is often an overlook area in a young dentist’s financial life.  As you are learning to do more procedures (than just the basic general dentistry). You need to revisit your Mal-practice insurance and update it.  They will want to know if you are doing molar extractions or if you recently started performing implants etc..

If you have specific questions about your Mal-practice insurance, or you are a D4 student graduating this May feel free to schedule a 15 minute phone call here.  White Coat Wealth Management provides various wealth management services to Dentists and provides easy to follow financial education.