Ian Jerrum offers a brief guide to the risks and cover types applicable to dental practices

Like any other organisation, dental practices are required to have appropriate employers' liability and motor insurance cover. Perhaps surprisingly there is no legal requirement for them to hold any other specific insurance, though liability insurance (or indemnity through a medical defence union) may be required under the terms of their contracts with the NHS or other healthcare organisations.

Where they have mortgages or leases on their premises, dentists may also be contractually obliged to hold property insurance.

New rules introduced by the General Dental Council in 2006 require all 'dental care practitioners' who advise or treat patients to indemnify themselves against claims for professional negligence.

As of 14 January 2005 any dental surgeries selling or even advising on insurance products must be registered with the FSA as a secondary intermediary. They may however, passively display promotional literature from insurers without FSA authorisation.

Secondary intermediary
Any surgery that chooses to become authorised as a secondary intermediary becomes subject to the same professional indemnity requirements as an insurance broker.

This requires an indemnity limit equal to 10% of commission income, subject to a minimum of €1m for any one claim and €1.5m for any one period of insurance.

Dentists are also, of course, subject to legislation like any other business. Particular areas of concern include legislation covering the storage, supply and disposal of drugs and hazardous waste. Health and safety at work should also be a major consideration for practice owners and managers.

Most risks are normally covered by surgery combined policies or adapted office combined policies. These provide core covers such as: property damage to contents, loss of money, employers' liability, and public and product liability.

Property damage to contents cover is automatically provided on a commercial all risks basis, such as accidental damage. If the practice has sprinklers fitted, the policy should be checked to ensure it covers accidental discharge of water.

From a contents point of view, dental surgeries often have precious metals, drugs and specialist equipment on the premises, so it is important to check that any limits and/or sums insured that apply to the policy are appropriate.

A safe may be necessary in which to store precious metals etc, as 'out of safe' limits may be as low as £500.

Where drugs are refrigerated the policy should be extended to provide adequate cover for deterioration of freezer stocks. Typical levels of cover vary from £1,000 to £5,000.

Since dental surgeries are open to the public, it might be prudent to obtain cover for theft without 'violent or forcible' restrictions.

Some insurers will seek additional security measures for high value items. CCTV systems have an obvious benefit as a deterrent to theft, but care should be taken in their positioning to ensure they do not breach the Information Commissioner's code of practice on monitoring and thereby the relevant Data Protection legislation.

Like other policies, surgery packages are usually subject to insurers' minimum security requirements and practice managers need to consider these carefully when choosing a policy. Failure to comply is likely to result in a claim being turned down.

The policy should also provide for any costs incurred in changing locks. Ideally this would include doing so following the loss of keys as well as following theft.

It is also important to check the adequacy of other standard commercial insurance package extensions and/or limits that may apply to surgery packages, for example: loss of metered water, trace and access of leaking pipes and drains, damage to landscaped gardens and damage to glass.

Dental surgeries do not typically have large sums of cash on the premises, so loss of money exposure should be relatively low – but the adequacy of limits should nevertheless be checked.

Where the policyholder or any of its employees live on the premises, it will also be important to clarify how 'in surgery' and 'at home' limits of cover apply, for instance, whether they apply severally or once only.

It is important to check the extent of products liability provided, as this can be quite restrictive under some office combined policies. An adequate level of cover should be arranged – although office combined policies will not include products liability arising from a breach of professional duty or from the supply of medicines or drugs.

These risks can be covered by a separate clinical negligence insurance policy or by a medical defence union discretionary agreement.

Subsidence cover
Property damage to buildings cover tends to automatically follow the contents section on a commercial all risks basis, but practice managers should assess whether subsidence cover is included – as this is not always the case. If the buildings are not insured under the cover, the contents section should cover damage to the buildings due to theft or attempted theft.

Moving on to consider optional covers, an obvious point of reference is business interruption cover. Some surgery combined policies will include this as a core cover; others will not. Cover may be offered on a full gross fees/income basis or on a restricted increased cost of working (ICOW) basis. In most cases, gross income cover is to be recommended.

Loss of gross income cover should ensure that funds are available to continue paying and thereby retain key personnel following insured damage (subject, of course, to the adequacy of the sum insured and indemnity period selected).

Insuring on a loss of income basis will also mean that the policy cover can extend to include losses arising out of denial of access, failure of public utilities, defective sanitation, vermin, murder, suicide or food poisoning on the insured premises, or notifable/contagious diseases in its immediate vicinity.

Business interruption (BI) insurance should be strongly recommended to all dental practices as estimates suggest that 80% of businesses go bankrupt following a serious fire if they do not have adequate BI cover in place.

Another area to watch is personal accident cover. The cover provided under some policies may apply only to accidents at work and the sums insured may not be adequate.

One final point to pick up on is cover for computer equipment. Loss or damage and BI cover arising out of mechanical or electrical breakdown can be included and should be carefully considered as most surgeries now rely to a considerable extent on information technology. IT

Ian Jerrum is managing director of Searchlight Solutions

This feature is based on materials available on Searchlight's e-learning system Tick. If you are interested in using Tick email: ian.jerrum@ssluk.net