Insurance is designed to protect against a loss and can be categorized as either personal or business insurance. Today we’re going to discuss business insurance, but for information about personal insurance such as life, disability, property & casualty, please visit Insurance Needs for Veterinarians: A Guide to Personal Protection Planning.
Losses in veterinary medicine can stem from general malpractice, negligence, and errors/omissions among others and can be financially devastating if not insured properly.
Who needs insurance?
All practicing veterinarians should have some form of professional insurance. Even those who are W2 employees and work as a salaried associate within a practice, ensure the practice pays for professional liability insurance as part of your benefits package. If not, you may need to purchase an individual policy outside of your employer.
Practice owners, relief vets, emergency vets, and specialty vets all should make certain that they are adequately insured against losses that can arise when practicing veterinary medicine.
The type of policy and level of coverage you need will vary depending on your job function, income, and level of exposure.
Types of business insurance
Business insurance can be quite broad, and there are many different types of business insurance you should consider given your duties. This article will discuss the three main types of business insurance coverage veterinarians need.
- Business Owner’s Policy (BOP)
- General Liability
- Commercial Property
- Business Income
- Errors & Omissions
- Workers Compensation Insurance
Business Owner’s Policy(BOP)
A business owner’s policy (BOP) combines various insurance coverages into one policy. The coverages typically included in a BOP policy include:
Liability insurance helps protect against medical damages, attorney fees, abuse coverage, and lawsuits that may arise in the course of business and for which you are legally responsible. Liability insurance is an essential need for veterinary practices, relief & emergency vets, or any other veterinarian who may perform duties outside of regular employment.
A common example is if a customer is bit by a dog in the waiting room of a vet clinic and this customer sues you, this liability policy would help cover medical expenses and attorney fees associated with this lawsuit.
Keep in mind this policy would not cover any injuries to employees. These would be covered under a workers’ compensation policy, discussed later.
Commercial property insurance helps protect the costly, physical assets of your practice or business such as the building, equipment, inventory, and outdoor fixtures such as signs and fencing.
Things happen, and any loss or damage to the building or its contents from events like a fire or burst pipe or vandalism would be covered under commercial property insurance.
In addition to insuring the physical assets and contents of your practice, a business owner’s policy also includes business income insurance. If your business/practice is forced to close down temporarily due to damage to your property, business income insurance helps with:
- Replacing lost income that would have been earned had no damage occurred
- Covering normal operating expenses, including payroll expenses
- Relocation and marketing expenses if forced to resume business at an alternative location
A business owner’s policy which includes these three types of coverages is considered the bare minimum a veterinary practice owner or independent contractor should carry.
Errors and omissions
Veterinarians are human, and as we all know humans make mistakes. Errors and omissions insurance, or E&O, helps protect against work mistakes. Errors and omissions insurance is also referred to as professional liability insurance.
As mentioned above, all practicing veterinarians should consider errors & omissions insurance, including those employed as an associate. These policies cover:
- Professional mistakes- Inaccurate work or the administration of incorrect medication would be an example of a professional mistake covered by professional liability insurance. Unfortunately mistakes can and will happen, and it’s important to be properly protected
- Unfulfilled services- Follow up of care not provided in a timely fashion resulting in injury or loss
- Negligence- The veterinarian failed to meet the professional standard of care, resulting in an animal becoming sicker, injured, passing away.
The vast majority of veterinarians strive to do the best they can for their patients and clients, but unfortunately accidents do happen and it’s important to understand how you are protected against these events.
Workers’ compensation insurance is required in pretty much every state for businesses that have employees. This insurance covers immediate and ongoing medical costs as well as lost wages while the employee is recovering from a work-related injury and illness.
Workers’ compensation can also help cover legal costs if an employee decides to sue a business owner over an injury or illness.
Independent relief or emergency vets, because they may be self-employed with no employees, most likely are not required to carry workers’ compensation insurance but it could be a good idea to obtain a policy to protect yourself. If considering workers’ compensation as an independent relief or emergency vet, compare coverages between this policy and your disability policy as there may be overlap in the coverages.
Other types of insurances
If your practice uses company vehicles this insurance will help safeguard the driver if an accident occurs during business activities. For relief vets or those who may use their personal vehicle to travel for work, consult with your property & casualty agent about whether you are covered as individual care insurance policies may not extend coverage for personal vehicles.
Offering health insurance to your employees is not required, but provides peace of mind for those in your practice. Group plans offer reduced premiums for employees and can be tax-deductible for premiums paid by the employer. Health plans can also assist in the recruitment and retention of great employees.
Technology E&O/Cyber liability
Clerical errors or possible data breaches where clients personal information has been compromised can be considered negligence and place the business at risk. Protect your clients data with strong safeguards and protect yourself with cyber insurance.
Much like a personal umbrella policy, a business umbrella policy can help cover losses that are beyond the scope of other coverages. A business umbrella policy can extend protection to professional liability, commercial auto, and general liability policies to name a few.
Where to get insurance?
The first place to start is by looking at group plans offered through veterinary organizations such as the AVMA. You can compare the policies offered and rates with outside carriers like Nationwide or Allstate, or consult with an independent business insurance broker who can shop and compare multiple carriers and coverages.
Ask a lot of questions and make certain you understand what is covered and what is not covered. The worst time to realize you are not covered is after an event has taken place.
The biggest risks your practice faces are those from unexpected events. Lawsuits, physical damages, interruptions in work are all very real occurrences that can significantly affect you, your employees, and your business. Obtain adequate coverage for your needs and review annually to check for any gaps in coverage that may expose you to unnecessary risk.
Andrew Langdon is a CERTIFIED FINANCIAL PLANNER™ and the founder of VetWorth, a fiduciary fee-only financial planning firm dedicated to serving the unique needs of veterinarians and their families.
Disclaimer: This article is provided for general information and illustration purposes only. Nothing contained in the material constitutes tax advice, a recommendation for purchase or sale of any security, or investment advisory services. I encourage you to consult a financial planner, accountant, and/or legal counsel for advice specific to your situation. Reproduction of this material is prohibited without written permission from Andrew Langdon, and all rights are reserved. Read the full Disclaimer.