Veterinary practitioners may well prefer handling unruly animals to handling their own insurance. But insurance smarts are as crucial to sustaining a successful practice as is knowledge of animal diseases and vaccines.
Purchasing veterinary insurance is “all about planning for the unknown or planning for surprises,” says Thomas McFerson, a partner with Gatto McFerson, CPAs, a veterinary consulting firm in Santa Monica, Calif.
Such surprises might include:
- Losses to buildings, business vehicles or clinic equipment taken on house calls.
- Losses of animals in a clinic’s care.
- Claims of malpractice by an animal’s owner.
- The death of a practice owner.
Protection typically starts with a business owner’s basic policy covering physical damage to a veterinary office or clinic and on-site, non-employee accidents. The policy also should cover specialized veterinary tools such as radiographic equipment, says Rodney Johnson, DVM, a representative of the American Veterinary Medical Assn.’s Professional Liability Insurance Trust (PLIT).
Indeed, “The dilemma the veterinarian faces is finding an insurance agent who is knowledgeable about his unique exposures,” says Brent Allen, the owner of Allen Financial Insurance Group of Phoenix.
Those exposures, or risks, loom large.
“We’re not seeing any large increase in the number of malpractice claims against veterinarians. The trend is quite flat over the last five years,” Dr. Johnson says. “But hypothetically, if three black Labradors are sitting next to each other in three kennels, it’s possible that the wrong one could be brought up for a procedure, which might be conceived as negligence, which would go under a veterinary malpractice claim. And veterinarians are responsible for the actions of their staff and their technicians.”
Through the insurance carrier Zurich, the AVMA’s Professional Liability Insurance Trust writes professional liability policies covering malpractice or negligence claims for about 55,000 of the estimated 65,000 practicing U.S. veterinarians, Johnson says. The same premium that veterinarians pay for malpractice insurance covers their staff and technicians as well.
The PLIT’s professional liability coverage comes in four policy classes:
- Small-animal practitioners.
- Equine practitioners.
- Food animal practitioners.
- Veterinarians with a mixed, predominantly small-animal practice.
Through the PLIT, a small-animal practitioner would pay an annual premium of $246 for $1 million of professional liability coverage per individual claim and an aggregate of $3 million per individual veterinarian each year. A small-animal practitioner working with show dogs or show cats might opt for more coverage at a higher premium.
Practitioners whose equine activity is 70 percent or more would pay $2,921 for similar coverage, since their patients might well have much higher value. “You can buy lower coverage, but most equine practitioners consider the $1 million/$3 million as a baseline level,” Johnson says.
For the same amount of coverage, a food animal veterinarian would pay $1,015, Johnson says.
As an addendum to a professional liability policy from the PLIT, veterinarians may purchase veterinary license defense insurance that provides legal representation in the event of a claim against their license to practice.
“In some states the activities by veterinary examining boards, licensing boards, against veterinarians’ licenses has increased,” Johnson says. “One state that seems to have a little more activity would be Arizona. You could also make the case that maybe in Arizona they have one of the most responsive examining boards.”
To add to the vagaries of insurance coverage, professional liability policies do not cover everything animal-related. Generally, if an animal boarded at a clinic escapes and runs away, its loss “would not be professional liability and under most standard business policies would not be insured,” Allen says.
Animal bailee coverage protects against such a loss. The good news on this front, at least for small-animal practitioners, is that household pets are, for insurance purposes, considered personal property of typically minimal monetary value.
On a more litigious front, the bad news, for all types of practitioners, involves issues of the human kind, including employee allegations of sexual harassment or wrongful termination.
To protect against such claims, veterinarians can buy Employment Practices Liability Insurance, or EPLI, through the PLIT or directly from insurance companies.
“It’s an emerging insurance need,” the PLIT’s Johnson says. “We see an increase in the purchase of EPLI by veterinary practices. It’s an increasing risk to veterinarians that they really need to pay attention to as business owners.”
Practitioners also should buy worker’s compensation insurance, which is state-regulated, to protect against claims of employee injury.
Clearly, health insurance is a huge and potentially costly issue for any practice.
And, overwhelming as the number of available insurance coverages may seem, veterinarians should never neglect their own life and disability insurance.
“Say for a one-doctor practice, if the doctor unexpectedly loses his life he can put the living spouse or other family members in a difficult situation if that doctor has inadequate life insurance,” says Nikki Quenette of Quenette Veterinary Consulting in Fergus Falls, Minn.
“The practice would be essentially without a doctor, so there would be no revenue coming into the practice but all the bills would need to be paid.”Related to disability insurance is business interruption insurance. “If you’re a one-doctor practice and you get severely disabled, how are you going to keep the practice going and still provide for yourself?” says McFerson, the Santa Monica, Calif., consultant.
Still, the best prescription for a trouble-free practice is an owner’s personal involvement.
“Insurance is only how you pay for a loss,” says Harry Barth, an asset-protection attorney in Orange, Calif., whose clients include veterinarians. “The most important thing veterinarians should do is get a check-up for insurance as well as asset protection and loss prevention. They should not be so busy as to forget that aspect of their business.”