What is entity cover and why might I need it?
As a result of recent legal decisions in cases brought against dental practices, it has become clear that both individual practice owners and any entity (Limited Company or partnership) that owns and operates a dental practice, could be held liable for the actions of a self-employed dental associate who may have provided negligent treatment to a patient seen in the practice. This is not a new law, but reflects recent changes in the approach being taken by patients' legal representatives, especially those conducting cases on a 'no win-no fee' basis. These firms are encouraging patients to sue a practice owner (or entity) rather than the dentist(s) who actually carried out the treatment.
Increasingly in recent years, both practice owners and associate dentists have set up limited companies on the advice of their financial advisors to manage their dental income and their tax position. NHS Providers have also chosen to incorporate in order to protect their NHS contract and goodwill value.
Whilst all practising dentists are required by law to have their own professional indemnity in place, to cover their own acts and omissions, it is important to note that in most cases this indemnity arrangement is personal to the individual dentist and will not cover claims brought against the Limited Company, this being a separate legal entity.
This means that a claim which is brought against the entity that you have shares in would only be covered if the entity has its own separate insurance, or if the entity is specifically named as a party covered by your personal insurance policy (or membership of a discretionary indemnity provider). Failing that, the company could be forced to pay any damages and the patient's legal expenses out of its own resources, and additionally to find and pay for its own legal representation and other costs incurred in defending the claim.
Is BDA Indemnity Entity Cover a stand-alone product that any Limited Company can buy?
No. It is only available to Limited Companies which are wholly or partly owned by one or more BDA Indemnity policyholder(s). Those BDA Indemnity Policyholders must collectively own 50% or more of the company. Only individual registered dentists who are in an appropriate tier of BDA Membership can apply for and hold a BDA Indemnity policy.
Is the cover legally binding and occurrence based?
Yes to both. Although many organisations choose to offer entity cover only on a 'claims made' basis, or on a discretionary basis (or worse still, a discretionary claims made basis), BDA Indemnity was set up with the deliberate intention of avoiding the many gaps that can arise in relation to claims made cover. Reflecting that, and the fact that a practice owned by a Limited Company might face additional vulnerability because of these gaps, we have taken care to ensure that both individuals and entities can enjoy the added protection of occurrence based, contractual indemnity insurance.
This is particularly valuable in the case of claims which relate to treatment which was provided by dentists who no longer work at the practice, perhaps having left many years ago. Occurrence based indemnity provides cover in perpetuity, irrespective of how many years later a claim is brought and without the need to buy any additional ('run off') cover.
Is there any limit on the size of corporate/Limited Company that can be covered by BDA Indemnity?
Not in terms of the number of dentists, or the number of practices/sites. But the BDA represents, advises and supports dentists, and BDA Indemnity was never designed to cover large corporates, especially not those which are majority-owned by non-dentists. For that reason, and to avoid smaller dental practices having to subsidise the larger corporate groups, we have chosen to use gross turnover as an approximate measure of practice size, limiting our entity cover to those with an annual gross turnover of £2million or less. Below that level, the pricing varies for different levels of turnover. Above that figure we will obtain a quote directly from RSA.
Does it involve a separate Policy, with different Terms and Conditions to the Policy for an individual dentist?
No. It is an optional extension to a BDA Indemnity policy held by any individual dentist who wholly or partly owns a Limited Company. The Schedule to the dentist's own BDA Indemnity Insurance Policy is endorsed to confirm that the entity becomes an additional named Policyholder. So the cover and policy wording is identical to that for an individual dentist, and the aggregate £10 million limit of cover for any policy year is for both the individual and the entity.
Does it only cover the entity for negligence claims?
No - as stated above, the policy wording and scope of cover is exactly the same as for any individual dentist. So it includes a vicarious liability extension, cover for registered dental nurses employed by the entity, legal costs cover for a wide range of challenges and investigations arising from the practice of dentistry (eg CQC, Information Commissioner, Advertising Standards Authority, Health & Safety Executive etc), and crisis management cover to provide advice and representation in mitigating any potential reputational damage to the entity from adverse media (or social media) attention resulting from a claim covered by the policy.
Is the price fixed and flat-rate, or does it take any account of whether or not the dentists working in the entity are BDA Indemnity policyholders?
In the interests of fairness, there is a sliding scale discount on the premium for entity cover, depending on the proportion of dentists working in the entity who hold a BDA Indemnity policy. This discount can be up to a maximum of 50% where more than 70% of the dentists working for the entity are BDA Indemnity policyholders.
Can I backdate this entity cover?
Yes. If you are an existing BDA Indemnity policyholder you can purchase retroactive cover back to your start date with BDA Indemnity, so that your entity is covered on the same terms and for the full period that you have been a BDA Indemnity policyholder (please note that this is subject to a maximum of three years if you joined BDA Indemnity before that).
Please complete the application form and return it to firstname.lastname@example.org to apply