Business Property and Liability Insurance Coverage for MDs

Posted on May 13, 2009 by Dr. David Edward Marcinko MBA MEd CMP™

General Commercial Property Insurance for Physicians

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

insurance-book8

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.

www.HealthDictionarySeries.com

fp-book3

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.

biz-book3

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

Get our Widget: Get this widget!

Our Other Print Books and Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

Subscribe Now: Did you like this Medical Executive-Post, or find it helpful, interesting and informative? Want to get the latest E-Ps delivered to your email box each morning? Just subscribe using the link below. You can unsubscribe at any time. Security is assured.

Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos

Filed under: Book Reviews, Career Development, Financial Planning, iMBA, Inc., Insurance Matters, Recommended Books, Risk Management, Sponsors | Tagged: , , , , , , , , , , | 1 Comment »

Understanding Automobile Insurance

Posted on May 7, 2009 by Dr. David Edward Marcinko MBA MEd CMP™

A Review for Physicians

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

insurance-book7

Like the Home Owners policy, automobile insurance comes in a package (commonly called a Personal Auto Policy, or PAP) containing declarations, forms and endorsements.

These are: Liability Coverage, Medical Payments coverage, Uninsured Motorist coverage, and Coverage for Damage to your auto.

Important Elements

The important elements of automobile coverage are:

  • The vehicle or vehicles is covered, whether owned or leased
  • The insured – the covered driver
  • What is covered?
  • What are the limits of coverage – for both property and liability?

Exclusions

What are the exclusions – for example, the business use of a vehicle may not be covered under the personal policy? Other coverage for example includes a friend driving your car, or, coverage driving a rental vehicle. The medical payments coverage outlines the limits of liability for medical services needed as the result of an accident.

PULP

The final area of common personal coverages is the Personal Umbrella Liability Policy. To say that our society has become very litigious may be a gross understatement. The umbrella liability policy transfers the risk of losing substantial assets or future personal income to pay legal obligations resulting from an adverse judgment. The umbrella policy originated to provide risk protection against catastrophic legal claims or judgments. Typically, coverage limits begin at $1 million with upper limits of $10 million, and some unique situations, more. The term “umbrella” arises from the contract language that reflects that the individual carries the appropriate underlying basic coverages (homeowners or automobile) and that this coverage is triggered after the limits of the base contracts are exhausted.

Provided Coverage

An important element of this policy is that coverage provides for protection for the named insured, spouse, and family members living in the household.  This coverage should be very important to those households with teenage drivers.  Organizations may also obtain the protection of an umbrella policy, with certain limitations and exclusions. Unfortunately, “failure to render proper professional services” is very frequently a common exclusion, though some insurance companies will cover this loss exposure with an increased premium.

biz-book2

Other Policies

Other common policies available include: Watercraft and Airplane coverage, Title Insurance, Flood Insurance (offered by very few private insurance companies), Renters Insurance (which covers the contents), and Condominium protection (like homeowners, but has language for common wall risks).

Personal Legal Expense Protection

Finally, there is the issue of the taxation of premiums and claim payments. Premiums for personal property and casualty coverage are not deductible. Therefore, only under unusual circumstances will any benefits received from the coverage be considered taxable income.

fp-book2

Assessment

However, the benefit payments may be considered capital gain if they happen to exceed the insured’s basis in the property. Uninsured losses are generally deductible under the current Internal Revenue Code.

As usual, specific questions concerning the taxation of premiums or benefits should be directed to your professional advisors.

Conclusion

Your thoughts and comments on this ME-P are appreciated. Feel free to review our top-left column, and top-right sidebar materials, links, URLs and related websites, too. Then, subscribe to the ME-P. It is fast, free and secure.

Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos

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

OUR OTHER PRINT BOOKS AND RELATED INFORMATION SOURCES:

Product Details  Product Details

Filed under: Book Reviews, Career Development, Financial Planning, iMBA, Inc., Insurance Matters, Practice Management, Professional Liability, Recommended Books | Tagged: , , , , , , , , , , , , , , , , | 5 Comments »

Physician Property, Casualty and Liability Protection

Posted on May 6, 2009 by Dr. David Edward Marcinko MBA MEd CMP™

Essentials of Risk Management

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

Medical professionals may not be familiar with the unique differences between the terms – property, casualty and liability.  Property insurance is coverage for the loss of, or damage to, real and personal property caused by fire, theft, explosion, riot, vandalism and a host of other risks.  Casualty and liability are generally interchangeable terms for the coverage of legal liability due to injury to others or damage to their property.

dhimc-book1

Personal Liability Coverage

One of the most common of all personal liability coverages is the Homeowner’s policy. This is not one policy, but several policy declarations (what is insured – the location), forms, endorsements, and “floaters,” which protect the structure of the home against loss, as well as the personal property (contents) to various degrees. Risks for homeowners need not be consistent across the country and the rates generally reflect the differences. For example, homes in the Midwest need protection from tornados, while homes along the East, West and Southern coasts need coverage for hurricanes and flood risks. 

Policy Form

The Home Owners Policy Form contains five categories of coverage for property:

  • The dwelling
  • Other structures
  • Personal property
  • Loss of use
  • Additional coverages, such as debris removal, trees, shrubs, and plants, or now, electronic theft (credit card, checking account theft).

The Contract

The contract contains three areas of Liability Coverage:

  • Personal liability
  • Medical payments to others
  • Miscellaneous liability benefits.

The Endorsements

Endorsements are an important aspect of the Homeowners coverage because they permit the customization of the coverage to the unique requirements of the individual. Two examples:

We noted that the West coast does not have tornados, however, they do have earthquakes and therefore, an endorsement can be added which will transfer the risk for earthquakes – or even volcanic eruptions. If the individual doctor has a home business, the business property can be protected against such perils as loss of business records due to fire or water damage. There is, however, no coverage for liability for providing poor professional services.

The Floaters

Finally, the Homeowners policy may contain “floaters” (named because the articles covered are moveable, thus “float around.”). The use of floaters can be very beneficial for coverage of unique or expensive electronic equipment and most commonly, jewelry. The other common personal coverage is Automobile Insurance. Forty-two states have compulsory insurance laws that require insurance on automobiles before it is registered. Various states have unique laws pertaining to:

  • Financial Responsibility, or proof of responsibility, by carrying insurance, a cash deposit, bond or security for future liability effective after an accident, which is the major criticism of these laws. 
  • Unsatisfied Judgment Funds that compensate individuals who are unable to collect from a judgment resulting from an automobile accident.
  • Uninsured Motorist Coverage is required in most states as mandated by state insurance regulators.  In essence, the insured’s own insurance company acts as the insurance company for the uninsured motorist.
  • No-fault Automobile Insurance stems from the problems associated with today’s tort law.  These policy forms, however, vary dramatically by state and a full discussion is not possible here.  Information and advice from a professional insurance agent is always recommended.

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

Our Other Print Books and Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

Subscribe Now: Did you like this Medical Executive-Post, or find it helpful, interesting and informative? Want to get the latest E-Ps delivered to your email box each morning? Just subscribe using the link below. You can unsubscribe at any time. Security is assured.

Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos

Product Details

Filed under: Career Development, Glossary Terms, iMBA, Inc., Insurance Matters, Practice Management, Recommended Books, Risk Management, Sponsors | Tagged: , , , , , , , , , , | 2 Comments »

Long-Term Care Insurance

Posted on May 5, 2009 by Dr. David Edward Marcinko MBA MEd CMP™

A Review for Doctors and Advisors

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

insurance-book6

Long-term care (LTC) insurance is considered one of the newest forms of personal coverage insurance.  LTC insurance is designed to transfer the financial risk associated with the inability to care for oneself because of a prolonged illness, disability, or the effects of old age.  In particular, it is designed to insure against the financial cost of an extended stay in a nursing home, assisted living facility, Adult Day Care Center, hospice or home health care.  It has been estimated that two out of every five Americans now over the age of 65 will spend time in a nursing home.  As life expectancy increases, so does the potential need for LTC. One unfortunate consequence of being the “new kid on the block” is the lack of actuarial data specifically collected for this style of policy.  This results in policy premiums being underpriced to sustain the claims currently being experienced.  During the first half of 2003, at least three insurance companies stopped writing these policies because of their losses.  Those insurers remaining in this market are expected to increase premiums quickly.  Unless these policies can be profitable for the company, their future will be an uncertain one.

Medicare

Any discussion of LTC must begin with an understanding of what Medicare is designed to cover.  Currently, the only nursing home care that Medicare covers is skilled nursing care and it must be provided in a Medicare-certified skilled nursing facility.  Custodial care is not covered. Most LTC policies have been designed with these types of coverage, or the lack thereof, in mind. To qualify for Medicare Skilled Nursing Care, an individual must meet the following conditions: 

  • Be hospitalized for at least three days within the 30 days preceding the nursing home admission;
  • Be admitted for the same medical condition which required the hospitalization; and
  • The skilled nursing home care must be deemed rehabilitative.

Once these requirements are met, Medicare will pay 100 percent of the costs for the first 20 days.  Medicare covers days 21 to 100 along with a daily co-payment, which is indexed annually.  After the initial 100 days, there is no additional Medicare coverage. Medicare Home Health Services cover part-time or intermittent skilled nursing care, physical therapy, medical supplies and some rehabilitative equipment.  These are generally paid for in full and do not require a hospital stay prior to home health service coverage.

biz-book

Critical LTC Policy Features

According to the U.S. Department of Health and Human Services and the Health Insurance Association of America, there are seven features that should always be included in a good long LTC policy: 

  • Guaranteed renewable (as long as premiums are paid, the policy cannot be canceled).
  • Covers all levels of nursing care (skilled, intermediate and custodial care).
  • Premiums remain level (individual premiums cannot be raised due to health or age, but can be raised only if all other LTC policies as a group are increased).
  • Benefits never reduced.
  • Offers inflation protection.
  • Full coverage for Alzheimer’s Disease (earlier contracts tried to eliminate this coverage).
  • Waiver of premium (during a claim period, further premium payments will not be required).

In addition, there are another seven features considered to be worthwhile and are included in the better LTC policies: 

  • Home health care benefits
  • Adult day care and hospice care
  • Assisted living facility care
  • No prior hospital stay required
  • Optional elimination periods
  • Premium discounts when both spouses are covered
  • Medicare approval not a prerequisite for coverage.

ADLs

Most LTC policies provide benefits for covered insured’s with a cognitive impairment or the inability to perform a specified number of Activities of Daily Living (ADLs). These ADLs generally include those listed below and the inability to perform two of six is generally sufficient to file a claim:

1. Bathing:  Washing oneself in either a tub or shower, or by sponge bath, and includes the task the getting into and out of the tub or shower without hands-on assistance of another person.

2. Dressing:  Putting on or taking off all necessary and appropriate items of clothing and/or any necessary braces or artificial limbs without hands-on assistance of another person.

3. Toileting:  Getting to and from the toilet, getting on and off the toilet, and performing associated personal hygiene without hands-on assistance of another person.

4. Transferring:  Moving in and out of a bed, chair or wheelchair without hands-on assistance of another person.

5. Eating:  The ability to get nourishment into the body without hands-on assistance of another person once it has been prepared and made available.       

6. Continence:  The ability to voluntarily maintain control of bowel and/or bladder function, or in the event of incontinence, the ability to maintain a reasonable level of personal hygiene without hands-on assistance of another person.

Other Issues

Another issue concerning ADLs is whether the covered insured requires “hands-on” assistance or merely needs someone to “stand-by” in the event of difficulty.  Obviously, LTC policies that read the latter are considered more liberal.

fp-book1

Long-Term Care Taxation

Some LTC policies have been designed to meet the required provisions of the Kassenbaum-Kennedy health reform bill, passed in 1996, and subsequently are “Tax Qualified Policies”.  Insured’s who own policies meeting the requirements are permitted to tax deduct some of the policy’s premium, based on age, income and the amount of total itemized medical expenses.  The major benefit of the tax-qualified LTC policy is that the benefit, when received, is not considered taxable income.  There are several initiatives in Congress, however, which would expand and simplify these deductibility rules. 

Assessment

Regardless, the medical professional or financial advisor [FA] should investigate the opportunity afforded them through their current form of business, or client use, for any purchase of a LTC policy. And, small businesses may be permitted to deduct LTC premiums on a discriminatory basis.

Conclusion

And so, your thoughts and comments on this Medical Executive-Post are appreciated. What have we missed, and who might wish to update this post?

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

Get our Widget: Get this widget!

Our Other Print Books and Related Information Sources:

Practice Management: http://www.springerpub.com/prod.aspx?prod_id=23759

Physician Financial Planning: http://www.jbpub.com/catalog/0763745790

Medical Risk Management: http://www.jbpub.com/catalog/9780763733421

Healthcare Organizations: www.HealthcareFinancials.com

Health Administration Terms: www.HealthDictionarySeries.com

Physician Advisors: www.CertifiedMedicalPlanner.com

Subscribe Now: Did you like this Medical Executive-Post, or find it helpful, interesting and informative? Want to get the latest E-Ps delivered to your email box each morning? Just subscribe using the link below. You can unsubscribe at any time. Security is assured.

Link: http://feeds.feedburner.com/HealthcareFinancialsthePostForcxos

Product Details  Product Details

Filed under: "Advisors Only", "Doctors Only", Book Reviews, Career Development, Glossary Terms, iMBA, Inc., Insurance Matters, Practice Management, Recommended Books, Retirement and Benefits, Sponsors | Tagged: , , , , , , , , , , , , , , , , | 9 Comments »