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General Commercial Property Insurance for Physicians

By Gary A Cook; MSFS, CLU, ChFC, RHU, CFP® CMP™ (Hon)

One category of property and casualty coverage is commercial or business coverage.  Commercial Insurance protects against those perils and losses that a medical practitioner routinely faces in their practice of healthcare. These exposures are both wide and varied and include aspects that may never affect most practitioners, such as the explosion of boilers, or aviation mishaps, or ship’s hulls failing. However, many risk exposures should be considered.  This post will outline the covered property, covered perils, and a little known area titled Loss Settlement.

Covered Property

• Buildings
• Business personal property of the policyowner (which, remember, may be the practice)
• Property and equipment used in the business
• Personal property of others in the care and custody of the policyowner.

Covered Perils

This topic defies clear summarization because it usually defines the exposures unique to the healthcare practice. The risks of loss for a radiology practice are different from those of an obstetrician / gynecology office. Within numerous policy forms, “named perils” are identified in addition to the “all-risks” form that generally cover common perils such as crime or fire. In addition, just like with the individual Homeowners policies, endorsements can be obtained to cover unique and specific risks, such as earthquakes in California and hurricanes in Florida.

Loss Settlement

This special provision of commercial policies provides for the settle of losses on a cash value basis.  Most policies are subject to a deductible amount, although “Full loss replacement value” coverage is usually available. Typically, the deductible is 20 percent of the covered value, with the insurance company only covering the balance. As with personal lines of coverage, the amount of the deductible effects the premium charged.

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Commercial General Liability Insurance

Commercial general liability (CGL) provides coverage for a wide variety of risks that a medical/healthcare facility may face.  In brief, these exposures will include (there are others in a general liability policy that may be “endorsed out” for the particular practice):

• Premises liability – injuries on the property owned or occupied by the policy-owner
• Business operations liability – losses caused by business activities of employees
• Contractual liability – litigation arising from oral or written contracts assumed by the organization.

Unfortunately, for the medical practitioner, as with many property and liability contracts, liabilities that occur “from the rendering or failure to render professional services” are standard exclusions from this section of liability coverage.

BOP

Often, insurance companies offer “packaged” programs or, Businessowners Policy (BOP) especially for small to medium medical practices.  These policies include “all–risks” coverages for the property and limited liability. Most BOP programs include such coverages as:

• Debris removal  
• Fire department service charges
• Pollutant cleanup and removal                
• Water damage.

Most importantly, BOP contracts will cover:

• Loss of Business Income (it is difficult to run the practice if half of it was destroyed by water damage from the fire in the office upstairs);
• Extra Expense Coverage (the cost of renting substitute property while the covered property is being repaired); and
• Payroll Expense (the need to retain specialists or key employees while the property is being rehabilitated).

Although the latter is limited in amounts and period of coverage, it is valuable coverage, especially for professional practices.

Assessment

Finally, the Businessowners Policy will cover losses due to crime (such as, forgery and alteration). As with Commercial Liability coverage, professional liability is excluded from Businessowner policies. 

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated.

Speaker: If you need a moderator or speaker for an upcoming event, Dr. David E. Marcinko; MBA – Publisher-in-Chief of the Executive-Post – is available for seminar or speaking engagements. Contact: MarcinkoAdvisors@msn.com  or Bio: www.stpub.com/pubs/authors/MARCINKO.htm

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