Who should pay for dental malpractice insurance?

Malpractice insurance is required in order to practice dentistry in many jurisdictions. Failing to have adequate malpractice insurance can violate many state laws, and may be grounds for discipline or termination.

At the same time, you need to make sure you have enough coverage. Insufficient coverage can be financially ruinous in case of a claim.

So as you negotiate your dental contract, make sure you discuss malpractice insurance, specifically:

  • Who is paying for it
  • The amount of coverage
  • What it will cost (if the employee must provide it)

What is dental malpractice insurance?

There are two types of dental malpractice policies: occurrence and claims-made policies. Each policy has benefits and disadvantages that may be unique to your situation. Discuss your needs with a qualified insurance agent.

An occurrence policy provides coverage against allegations of malpractice for dental services which were rendered while the policy is in force, regardless of when the actual claim is filed or reported.

A claims-made policy requires that both (i) the incident giving rise to the malpractice claim and (ii) the report of the claim occur while the policy is in force (although these may not occur in the same policy year). However, if a claim is filed after the dentist’s policy has expired (or properly terminated), no coverage would be provided unless the dentist purchases an extension of the policy known as “tail” coverage.

The malpractice insurance will also have “limits of liability” which stipulate the total amount of losses for which an insurer will provide coverage. There are two different limits of liability in a policy. The first limit is the maximum amount an insurer will pay for a single malpractice claim. The second limit is the total amount an insurer will pay for all claims incurred within a single year.

For example, a policy providing a $1 million/$3 million limit of liability will provide coverage for up to $1 million for any single claim and not more than $3 million for all claims in a single policy year. In some instances, a policy’s limit of liability includes only amounts paid in damages to the plaintiff. In other instances, the limits may include the insurer’s expenses in defending the claim or reaching a settlement. In all instances, the policy should specify which limits apply.

Who should provide dental malpractice insurance?

Either party — employer or employee — can provide dental malpractice insurance. The clause in your employment agreement will read differently depending on who is providing it.

If the employer provides coverage

If your employer is providing coverage, you should ask about the amount of coverage and confirm you’re comfortable with it. The contract clause will be relatively simple, such as:

Employer shall provide liability insurance to cover Employer and all employees, including Associate, as well as fire/casualty insurance coverage for the equipment and materials kept by Associate on Employer’s premises.

If the employee provides coverage

Things are more complicated if the employee must provide coverage. In this case, make sure the contract stipulates everything very clearly, including:

  • Policy limits
  • What happens if the insurance company refuses coverage
  • Whether a “tail” is in effect, if the coverage is a “claims made” style policy
  • That the employee must file proof of coverage with the employer

A very detailed example is available on page 30 of the Dental Employment Agreements ebook.

How to decide how much malpractice insurance you need

Consult with a qualified licensed insurance agent to discuss what type(s) of insurance and the appropriate limits for your situation. You want to make sure you are adequately protecting your legal and financial interests.

The ADA does not offer set guidelines as to appropriate limits of liability for dentists. The risk factors vary based on location, type and scope of practice, procedures and use of anesthesia, employer requirements, employee’s financial situation, etc.

However, based on recent national trends, it appears that many leading insurers for dental malpractice insurance market policies of $1 million per occurrence and $3 yearly million aggregate limits to general dentists.

Learn more about negotiating and understanding dental employment agreements and contracts. Check out the full list of clauses and topics and download the ebook, which is full of sample language, examples and in-depth explanations.