What Is Entity Malpractice Coverage and Why Is It Important for a Dental Practice?

Your individual malpractice insurance is designed to protect you as a dental professional, but what happens if your dental practice is also named in a malpractice lawsuit?

Entity malpractice coverage is professional liability coverage for the dental practice itself. It may help protect the business entity when the practice is named as a defendant in a malpractice claim, including certain defense costs, legal expenses and damages, depending on the terms of the policy.

For dentists who own a practice, understanding the distinction between individual malpractice insurance and entity malpractice coverage can be an important part of protecting the business they have built.

What Is Entity Malpractice Coverage?

Professional liability insurance, also called malpractice insurance, generally provides coverage for an individual dentist. However, a malpractice claim may name not only the dentist involved but also the dental practice.

Entity malpractice coverage is designed to address that separate exposure.

Depending on the policy, entity coverage may provide protection similar to an individual professional liability policy, including assistance with the defense of the practice, legal expenses and payments associated with covered claims.

Individual Malpractice Insurance vs. Entity Malpractice Coverage

The primary difference is who is being protected.

Individual professional liability insurance generally protects the individual dental professional when that person is named in a malpractice claim.

Entity malpractice coverage generally protects the dental practice or business entity when the entity itself is named in the claim.

A malpractice lawsuit can potentially name both, which is why dental practice owners should understand how their individual and entity coverage work together.

Why Can a Dental Practice Be Named in a Malpractice Lawsuit?

A dental practice may face liability related to the actions of dentists, partners, associates or employees working within the practice.

Example 1: The Dentist and Practice Are Both Named

An orthodontist is sued by a patient who claims that staff at the orthodontic practice mistreated them. The lawsuit names both the orthodontist and the practice itself.

Even if the orthodontist has individual professional liability insurance, the practice may have its own exposure. Entity malpractice coverage may provide protection for the practice, subject to the terms and limits of the policy.

Example 2: An Employee’s Actions Affect the Practice

A patient calls a dental practice about a problem requiring attention. The receptionist fails to relay the message to the dentist, and the patient’s condition worsens.

A subsequent claim could potentially involve both the dentist and the practice. Depending on the circumstances and policy terms, entity malpractice coverage may respond to covered claims against the practice, while the dentist’s individual professional liability policy may address covered allegations against the dentist.

Does Individual Malpractice Insurance Cover Your Dental Practice?

Not necessarily.

An individual professional liability policy is designed primarily to protect the insured dental professional. That does not necessarily mean the dentist’s business entity has the same protection.

This distinction becomes particularly important when a practice employs or contracts with other dentists or has multiple owners. A claim involving another provider or employee could potentially name the practice even when the practice owner was not personally involved in the patient’s care.

Dental practice owners should therefore determine whether their existing professional liability coverage extends to their business entity and, if so, how the available limits apply.

What Does Entity Malpractice Insurance Cover?

Coverage varies by insurer and policy, but entity malpractice coverage may help with covered expenses when the dental practice itself is named in a professional liability claim. These can include:

• Legal and defense costs
• Settlement expenses
• Covered damages or judgments
• Claims arising from certain actions of dentists or employees for which the practice is alleged to be responsible

Exact coverage, exclusions and limits depend on the individual policy. Dentists should review their policy documents and discuss their specific practice structure with their insurance professional.

Shared vs. Separate Entity Coverage

Entity protection may sometimes be included with an individual professional liability policy, or a practice may have separate entity coverage.

This distinction matters because of policy limits.

With shared limits, defense costs and covered payments for the dentist and practice may draw from the same available limits. With separate entity limits, the practice may have its own limit of liability rather than sharing the individual dentist’s limit.

The appropriate structure can depend on factors such as practice ownership, the number of dentists in the practice and whether the practice employs or contracts with other providers.

Which Dental Practices Should Review Entity Malpractice Coverage?

Any dentist who owns all or part of a dental practice should understand whether the business entity itself is protected.

The issue can become particularly important as a practice grows to include:

• Multiple owners or partners
• Associate dentists
• Independent contractors
• Additional locations
• Larger clinical and administrative teams

It can also be relevant across dental specialties. Orthodontic, periodontal, endodontic, pediatric dental and oral and maxillofacial surgery practices, for example, may have multiple providers and employees whose actions could potentially expose the practice entity to a claim.

As the structure of a practice changes, its malpractice coverage should be reviewed to determine whether the protection still reflects the way the practice actually operates.

Choosing Entity Malpractice Coverage for Your Dental Practice

Entity malpractice coverage isn’t one-size-fits-all. Practice structure, ownership, number of providers and existing professional liability coverage can all affect the type and amount of protection a dental practice may need.

An insurance advisor who understands dental practices can help identify potential gaps between an owner’s individual professional liability insurance and the coverage protecting the practice itself.

Treloar & Heisel works with dentists and dental specialists to evaluate professional liability and entity malpractice coverage based on their individual practice structure and needs.

Learn more about Entity Malpractice Coverage.

About Treloar & Heisel

Treloar & Heisel, an EPIC Company, is a premier financial services provider to dental and medical professionals across the country. We assist thousands of clients from residency to practice and through retirement with a comprehensive suite of financial services, custom-tailored advice, and a strong national network focused on delivering the highest level of service.

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