As the new year unfolds, dental practices must assess their office insurance coverage to ensure preparedness for potential storms or natural disasters. Here are four imperative tips FDA Services (FDAS) recommends to safeguard your practice against unforeseen damages and financial setbacks.
1. Review Replacement Cost Limits
Evaluating replacement cost limits annually is paramount. With the escalating costs of rebuilding structures and acquiring dental equipment, an outdated coverage amount could leave you significantly underinsured. Consider this scenario: a dentist who started their practice in 2015 insured their business personal property for $300K, the amount financed. However, when a storm struck in 2023, the total cost to rebuild the practice, including improvements and betterments per the lease agreement, exceeded $500K. Ensuring accurate replacement cost limits is essential to avoid such financial pitfalls.
2. Adequate Business Income Coverage
Ample business income coverage is crucial. In the aftermath of a storm causing physical damage to your practice, this coverage compensates for lost income until normal operations can resume. Instances like Hurricane Michael have shown that delays in finding reliable repair services can extend restoration timelines significantly. Aim for a coverage period of at least six months of actual loss sustained to mitigate financial strain during such challenging times.
3. Understand and Scrutinize Deductibles
Understanding deductibles and uncovering hidden ones is crucial. While a 5% wind/hurricane deductible might seem reasonable, it's essential to comprehend how it's calculated. For instance, a 5% deductible on a $500K coverage means a $25,000 deductible. Be wary of hidden deductibles like 1/12, 1/6, 1/4, or 1/3 monthly limitations on business income coverage. Some carriers cap the amount paid monthly or quarterly, adversely impacting your coverage.
4. Purchase Flood Coverage
Investing in flood coverage is non-negotiable. Despite assumptions about not being in a flood-prone area, past events have shown that everyone in Florida is susceptible to flooding. During events like Hurricane Nicole, severe flooding affected the Orlando area, leaving several practices responsible for 100% of repair costs out of pocket. Acquiring flood coverage is a proactive measure to safeguard against unexpected flood-related damages.
In conclusion, thoroughly reviewing your dental practice's insurance coverage is a prudent step toward fortifying your readiness for potential storms or disasters. Stay updated, reassess annually, and ensure your coverage aligns with the current replacement costs and potential risks. Being adequately insured can make a substantial difference in protecting your practice's financial health during challenging times. Don't wait for the storm; fortify your coverage today! FDAS is here to assist; call us at 800.877.7597 or visit fdasevices.com.