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Practice Interruption Insurance?

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  • Practice Interruption Insurance?

    Long-time lurker, first time poster.

    I'm finishing fellowship in July and will be heading to the upper Midwest, and will be taking over a single-doc shop with about 10 employees. Something on my mind recently, especially with the latest WCI podcast on two docs and their experiences claiming disability insurance, is the issue of practice interruption insurance especially because I will be the only provider in the practice. I feel like in general I have a decent grip on most other types of insurances, but I haven't been too successful with navigating this portion yet. In particular I'm wondering about things to look for in the terms and definitions, different points to evaluate the contract, or in general hidden bombshells that I may not yet be aware of.

    If anyone has any tips, recommendations, resources, or first hand experience, I'd love to learn more.

  • #2
    Waiting period, cap on total payments, cost of insurance, fire, flood, riots, force majure clause. Read the fine print and see what coverage you need and what you can get.

    There is no perfect insurance since the insurance company needs to make money over and above the cost of paying agents and paying out against policies. That said, a policy from a high quality company with 10% or 20% higher premiums might have better terms and be more likely to pay out without too much fight if you actually need to use your business interruption insurance.

    Sweat the details somewhat, but this isn’t the most important part of buying and running your new practice. You might want to build up some cash reserves, negotiate down your rent / lease, lower the cost of your supplies and other overhead, and otherwise build your own capacity to handle an interruption to your business.

    Congratulations on becoming a practice owner!

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    • #3
      I was a solo practice OB/GYN. I had this type of insurance when I was doing OB. I cancelled it when I quit OB and was doing just GYN part-time. My thinking was that once I was truly FI if something happened I would just retire. Especially early in my practice I liked knowing this insurance was there in case something happened to keep key employees paid while I recovered from whatever it was. I actually filed a claim at one point when my town was hit by a string of tornados. My office was not hit but the electricity was out for a week. I kept up the hospital work but the office was closed. I bought my policy thru my speciality organization ACOG.

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      • #4
        If you are wanting a policy that pays your business expenses and obligations if you were to become disabled then that is Business Overhead Expense policy. Most of those start after a 30, 60, or 90 day waiting period and then have benefit payout for 12, 18, or 24 months with a maximum of about $50,000.00 per month. Really read the language on the expenses that are eligible and what defines both an elimination day along with a disability. Really watch that language if you look at association based plans as those get really tricky in order to have a claim payout.
        Scott Nelson-Archer, CLU, ChFC
        281-770-8080 Direct / [email protected]

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        • #5
          I was just reading something about most insurance companies writing clauses that they will not cover pandemic related closures (if they didn't already have them in them). Things where large groups of people file claims at the same time are uninsurable without governmental support/subsidies. That's why there is no market for flood insurance, and wild fires are becoming uninsurable as well. Private insurance can only cover things where small percentage of people are claiming large amounts of damages at a time.

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