August 8th, 2022 – The costs for starting a new dental practice can amount to up to 600,000 euros, depending on the focus. The mediation of a practice inventory insurance is correspondingly demanding. Consultation topics here are, for example, the aspects of underinsurance and determination of the sum insured. The insurance expert Nicole Gerwert describes in the following text how the protection of the dentist is approached accordingly.
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Material damage to the practice inventory can be covered by the practice inventory insurance of the same name (also called practice contents insurance). This reduces the risk of loss and damage from storms, fire, lightning, burglary, theft, water leaks or vandalism.
For the dentist, this is an existential issue. The establishment of a practice, including the dental-technical equipment, is the foundation of the dental activity and thus the professional success of every dental practice. When founding a surgically oriented dental practice with the appropriate equipment, the usual financing volume can be up to around 600,000 euros.
- Agent Nicole Gerwert (Image: Elena Eraßmy)
A general dental practice is generally granted a 25 to 40 percent lower financing volume for a new establishment (including imputed conversion measures).
underinsurance
In practice inventory insurance, just like in household contents insurance, care should always be taken to include a waiver of underinsurance. Underinsurance arises when the sum insured selected is less than the actual value of the existing practice inventory.
Furthermore, the risk of underinsurance also applies if the policyholder wants to reduce the insured sum of an existing contract. This is shown by a judgment of the Karlsruhe Higher Regional Court of January 15, 2013 (12 U 121/12):
“If the policyholder wants to reduce the insured sum of an existing contract, the insurance intermediary may have to point out the risk of underinsurance and the importance of the replacement value. He must not assume that his customer alone can see the consequences.”
Underinsurance Waiver Clause
The inclusion of an underinsurance waiver is subject to certain conditions. In the household goods sector, a lump sum per square meter is usually agreed. 650 euros per square meter are common.
Some providers in the commercial area offer maximum liability amounts. This is referred to as the “First Risk Model”. This means that regardless of the correct sum insured, payment is made up to the maximum liability sum specified and agreed in the contract – without examining any underinsurance waiver. In this model, therefore, no calculation of the total is necessary and underinsurance cannot arise.
In these models, cleaning up costs and other damage elimination costs are usually also insured at flat rates, for example ten percent of the sum insured. There is a risk if these additional costs exceed the intended compensation value. The remaining costs are charged to the customer.
Release of liability of the intermediary via the choice of provider
Fortunately, there are now insurance products on the market in this area of practice protection that do not require a valuation. Here, the indication of a correct sales amount for the dental practice or information on the number of treatment units available lead to a conclusion with more liability.
If the sales total or the number of treatment chairs is listed correctly, the insurer usually grants a waiver of underinsurance. Thus, in the event of a claim, no deductions may be taken into account due to underinsurance.
Some companies combine this practice with the obligation to report sales figures on a regular basis. The underinsurance waiver is then valid as long as there is a current turnover report.
Determination of the sum insured
In order to determine the correct sum insured, a sum calculation must be carried out for each dental device and other inventory in the dental practice. Depending on the tariff, the sums that would be necessary to replace the loss or damage at current or replacement value must be noted.
As a rule, the insurers reimburse the replacement value. An exception may be items that are very old or no longer in use. When determining the original values, the tax consultant of the dental practice can provide help if necessary. Because in the list of assets for its tax evaluation for the establishment of the practice and at the current time, the corresponding information on the acquisition value is shown.
Furthermore, flat-rate costs such as clean-up costs must be taken into account. The insurers provide you as an intermediary with special questionnaires and tables to make things easier. It is also helpful to have cost statements from the relevant dental depots, which would provide the practice in question with new equipment in the event of damage.
Consider new purchases
It should also be borne in mind that the stock of insured inventory increases in value over time. For example, new medical equipment, furniture, EDP equipment or individual dental parts are purchased as needed.
This purchase of new equipment actually increases the value of the dental practice and would have to be reported to the insurer promptly as part of an adjustment to the sum insured. In order to avoid the risk of underinsurance, a buffer of around ten to fifteen percent should be added to the sum insured when the sum is calculated.
The above text is an excerpt from the book “Target group analysis dentists – Status, needs and solutions: Opportunities for specialization” by insurance expert Nicole Gerwert (VersicherungsJournal January 20, 2017). In the author’s experience, dentists are often wrongly advised on insurance and financial matters. Many intermediaries and financial advisors lack the knowledge about the profession that is necessary for sustainable cooperation between advisors and customers. In her book, Gerwert explains the characteristics and requirements of her target group in detail. It shows how the risks to be hedged are designed and how solutions are calculated. In addition, the book provides practical tips, checklists and statistical data on developments in the dental market. |
Nicole Gerwert
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