Is your dental practice at risk from being underinsured?
Is your dental practice at risk from being underinsured
?
When arranging your dental practice insurance policy it is critical that the insurance cover meets your individual requirements. One of the primary considerations is whether the sums insured for buildings and contents are sufficient for your circumstances, as an insurance policy based on an incorrect figure can have very serious ramifications in the event of a claim. However, calculating accurate values can be daunting and is often left to mere guesswork.
These difficulties are commonly experienced by policyholders and can sometimes lead to underinsurance, where the policyholder simply underestimates the value of their contents, or rebuild costs of the property. It's very easy for the ongoing accumulation of items to go unnoticed; new furniture or equipment can all add up to be more than expected.
Avoid the common slip-ups
Your dental practice's buildings insurance protects your main asset and is, of course, one of the most essential aspects of cover you require. But whilst you will need to ensure you are fully protected in the event of a claim, similarly you will want to avoid over-insuring your property.
On the whole, the market value of a property is likely to be significantly higher than the cost of rebuilding it. However some policyholders believe they need to insure for the full purchase or market value of the property, resulting in "over-insurance". But such over-insurance will not lead to a greater payout in the event of a claim; it will simply mean you are paying a higher premium for increased cover that you will never see the benefit of.
Serious Implications
When underinsurance is evident, most Insurers will typically apply what is known as the "Average Condition". This clause dictates that if the actual cost of replacing an item or rebuilding a property (at the time of the loss or damage) exceeds the sum insured under that specific section of the policy, all claims will be reduced in direct proportion to the degree of underinsurance. For instance
A Dental Surgery insures Contents for 50,000. This sum should represent the full cost of replacing all items as new. At the time of a claim for accidental damage to an item costing 5,000, it becomes apparent that the total replacement cost of the surgery contents is actually 100,000. Consequently, the policyholder is underinsured by 50% and will therefore only receive 50% of the replacement value of the item, resulting in a payout of only 2,500, less any deductible (Excess) payable.
With this in mind, policyholders should always look beyond the initial cost of the insurance policy they are purchasing and pay more attention to the limits of cover offered by the policy. Many price comparison websites will provide insurance quotations at low prices, but will rarely take into account your individual requirements. The majority of mainstream policies are also unlikely to include the scope of cover and inner limits to match your lifestyle as a dental professional, with essential covers such as Accidental Damage and Legal Expenses often not included as standard.
Finding a Policy tailored to you
Advertisements will promote various insurers and brokers offering quotations but how can you be sure that their policies are tailored to your profession and lifestyle?
The BDA Plus Dental Practice Insurance policy, underwritten by Zurich Insurance, provides "Day One Uplift" protection, which automatically increases your Declared Value by 15% with effect from inception (Day one of cover). This higher figure becomes the sum insured and should adequately cater for fluctuating values, provided the declared value has been set correctly. Not only that, each year your key sums insured will be increased by a set percentage to take into account inflationary changes. Known as "Index Linking", this will often be applied to household insurance policies too.
For your personal insurances, BDA Plus can provide a Home Insurance policy, which is tailor-made to the professional, offering wide cover, high inner limits and low excesses. Buildings cover is set at 500,000 and Contents at a recently enhanced 75,000, both with the option to increase to fit your particular needs. BDA Plus can also supply a practical "Contents Calculator", which can be used to accurately gauge the value of your household and personal contents.
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