Indemnity cover is a legal requirement for all practicing dentists. If a patient makes a claim against you, indemnity cover ensures that claims can be settled, without you being left out of pocket. However, over the last few years, when the dentist being sued is not available, law firms are increasingly going after practice owners or their entity instead.
Even if they have no ongoing relationship with the self-employed dentist the claim involves, lawyers can pursue a case against the owner of the practice that the patient was treated in due to vicarious liability.
The entity cover loophole
Some practice owners are choosing to register their businesses as entities. To do this you must register a limited company with Companies House, for the purpose of carrying out dental work. This provides some benefits, making practices more tax efficient.
This increase in dentists registering their businesses as entities has created a gap when clinical negligence claims are made by patients.
This increase in dentists registering their businesses as entities has created a gap when clinical negligence claims are made by patients. This is because entities are limited companies and can face legal action, independent of the individuals indemnified for the services provided. If a lawyer makes a claim against your entity, most indemnity providers will not cover you, as the claim is not against the named person on the insurance policy. This results in the claim and associated costs needing to be paid out of your pocket
There are more dentists (associates and practice owners) currently operating entities than we originally thought, with recent figures suggesting around 60% work in this way. We originally predicted it to be around 10 – 15%. This leaves a huge number of dentists vulnerable to these sorts of claims.
New financial and legal risks
It's worrying how few people in the profession understand these risks.
By far your best option is to have entity cover in place to protect you in the unfortunate event that you come up against these financial and legal risks.
Insurance providers have told dentists in these cases to request claims are bought against them personally, when the entity has been sued. However, if a dentist cannot persuade the lawyer to do this and the entity is pursued, this leaves the practice owner on their own to bail themselves out, out of their own pocket.
In some cases, this even leaves practice owners in the unsavoury position of having to counter-sue the associate who carried out the original course of treatment. This is extremely messy and unprofessional. By far your best option is to have entity cover in place to protect you in the unfortunate event that you come up against these financial and legal risks.
How can I ensure I'm covered?
In the unlikely event that a patient does make a claim against your entity, BDA Indemnity can provide cover for you. If you are a member and already hold an indemnity policy with us, we can add the cover as an endorsement or extension of your policy. This will endorse your policy for your name, as well as your limited company. We can also cover you from the start of your policy with us which may be up to three years ago.
Our cover is occurrence based, which makes it unique, and something not often seen on the market. There are discounts available on the entity premium depending on the number of associate dentists who work in the entity who are BDA Indemnity policyholders.
We are driven to fix things, like the loophole with entity cover, that the profession has faced over the years.
Our dentist for dentist's cover is here to support you and aim to fill the gaps with the best products possible. You can get in touch with our expert indemnity team to discuss your policy in more detail by calling 020 7535 5858 or emailing [email protected].