Choosing the right dental indemnity insurance is a critical decision for dental professionals. One of the most common questions we get asked is “how do I decide whether to have claims-made or occurrence-based dental indemnity insurance?” Understanding the differences between these options and their implications is essential in making an informed choice. In this article, we will explore the factors to consider when deciding whether to have claims-made or occurrence-based dental indemnity.
Claims Made Dental Indemnity
Claims-made dental indemnity insurance provides coverage for claims that are made during the policy period. It means that the claim must be both made and reported to the insurance provider while the policy is in effect. Once the policy expires or is terminated, coverage ceases for any future claims, regardless of when the incident occurred.
Occurrence Based Dental Indemnity
Occurrence-based dental indemnity insurance, on the other hand, offers coverage for incidents that occur during the policy period, regardless of when the claim is made. With this type of coverage, even if a claim is filed years after the incident took place, as long as the incident occurred during the policy period, it will be covered.
Factors to Consider:
1. Cost: Claims-made insurance typically starts with lower premiums, especially in the early years. However, premiums may increase over time as claims-made policies often include an additional cost for “run-off cover.” Run-off cover provides protection for claims that may arise after the policy has expired. Occurrence-based insurance generally has higher upfront premiums but eliminates the need for tail coverage expenses in the future.
2. Retroactive Date: Claims-made policies have a retroactive date, which is the date from which coverage begins for incidents. It is crucial to ensure that the retroactive date aligns with the start of your dental practice or the date you first obtained claims-made coverage. Occurrence-based policies do not have retroactive dates, as they cover incidents that occur during the policy period, regardless of when the coverage started.
3. Stability and Continuity: Claims-made policies require ongoing coverage to ensure protection for past incidents. Dentists must maintain continuous coverage to avoid any gaps that may impact their ability to claim for past treatments or procedures. Occurrence-based policies offer stability and continuity since coverage is not tied to the policy period. Once a claim is covered under an occurrence-based policy, it remains covered, even if the policy is not renewed.
4. Future Liability: Claims-made policies require dentists to secure tail coverage when transitioning to a new policy or retiring. Tail coverage can be costly and is necessary to protect against claims that may arise after the policy has expired. Occurrence-based policies eliminate the need for tail coverage, providing ongoing protection for incidents that occurred during the policy period.
Deciding between claims-made and occurrence-based dental indemnity insurance requires careful consideration of various factors such as cost, retroactive date, stability, and future liability. Each option has its own advantages and considerations, and it is important to evaluate your specific circumstances and preferences before making a decision.
Consulting with an experienced dental indemnity insurance provider can provide valuable insights and guidance to help you make an informed choice. By understanding the nuances of claims-made and occurrence-based coverage, dental professionals can select the most appropriate option that best suits their needs, offering comprehensive protection and peace of mind throughout their career. Remember, regular review and reassessment of your insurance coverage is essential to ensure ongoing adequate protection.
