Most of us went into medicine because we wanted to take care of children, not because we wanted to become experts in commercial insurance. But once you open a direct primary care practice, you are running a small business, and that business has risks that your medical malpractice policy was never designed to cover. One of the most important — and most commonly misunderstood — pieces of that
protection is business liability insurance, usually purchased as part of a package called a Business Owner’s Policy, or BOP.
What Business Liability Insurance Actually Is
Business liability insurance protects your practice against the everyday risks of operating a physical business: a parent who slips on a wet floor in your waiting room, a delivery driver whose foot gets caught in loose carpet, a laptop or vaccine refrigerator damaged in a pipe burst, or a claim that your marketing materials infringed on someone else’s copyright. None of these situations involve the quality
of medical care you provided, yet each one can generate a real financial claim against your practice. A BOP bundles this general liability coverage together with commercial property insurance and typically business interruption coverage, which replaces lost income if a covered event forces you to close temporarily.
How This Differs from Malpractice Insurance
It’s worth being explicit about this distinction, because the two coverages are often confused and neither one substitutes for the other. Malpractice insurance (a form of professional liability coverage) protects you against claims that you made a clinical error — a missed diagnosis, a medication mistake, or care that fell below the accepted standard. Business liability insurance, by contrast, covers non-
clinical accidents and property risks that have nothing to do with the medical decisions you make. A DPC practice needs both: malpractice coverage for the practice of medicine, and a BOP for the practice of running a business.
Core Elements of a Good Business Owner’s Policy
For a DPC clinic, a well-built BOP should generally include:
• General liability coverage for bodily injury, property damage, and advertising-related claims
involving patients, vendors, or visitors
• Commercial property coverage (also called business personal property, or BPP) for your equipment, furniture, medical supplies, and leasehold improvements
• Business interruption coverage to replace lost income if your clinic has to close due to a covered loss, such as fire or water damage
• Optional add-ons worth discussing with your agent, including cyber liability (increasingly important given the amount of patient data you hold electronically), employment practices liability if you have staff, and equipment breakdown coverage for exam room and lab equipment
A company I’ve had good experience with, and would encourage you to get a quote from, is The Hartford. They offer BOPs specifically tailored to medical and healthcare office settings, with flexibility to add the endorsements above as your practice grows.
Yes, You Need This Even If You Rent
A surprisingly common misconception among new practice owners is that if you lease your clinic space, the building owner’s insurance has you covered. It does not. A landlord’s policy protects the physical structure — the walls, roof, and building systems — not your equipment, your supplies, or your liability if a patient is injured while in your suite. Most commercial leases will actually require you, as the tenant,
to carry your own general liability and property coverage, and to name the landlord as an additional insured. Leasing space reduces your real estate risk, but it does not reduce your business liability risk.
Expect to Inventory Your Clinic’s Contents
When you apply for a BOP, the insurer will ask for a reasonably detailed inventory of your business personal property — exam tables, point-of-care lab equipment, vaccines and cold-chain supplies, computers, furniture, and leasehold improvements — along with an estimated replacement value for each category. This inventory determines your property coverage limit, so it’s worth doing carefully
rather than guessing low to save on premium. Plan to revisit and update this inventory every year or two, and any time you make a significant equipment purchase, since the replacement cost of medical equipment and supplies tends to rise over time. An outdated inventory is one of the most common reasons practices find themselves underinsured after a loss.
Budgeting for the Policy
Costs vary based on your clinic’s square footage, location, revenue, staff count, and the value of your equipment, but as a general planning figure, most small medical and healthcare offices pay somewhere in the range of $800 to $2,000 per year for a solid BOP, with many practices landing around $1,200 to $1,700 annually. Getting a couple of quotes, including one from The Hartford, will give you a number
specific to your clinic. It’s a modest annual line item relative to the protection it provides, and it’s money well budgeted for from day one rather than added as an afterthought.
As you continue building the business side of your practice, business liability insurance is one of those unglamorous but essential pieces of infrastructure — much like a good EHR or a solid lease. Taking the time to get it right now will save you a great deal of stress later.
If you’d like more guidance launching or growing your own direct care practice, DPC Pediatrician offers a startup guide, coaching programs, on-demand courses, and even one-on-one consulting.
