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Monthly Archives: December 2015

Besides Professional Liability, What Coverages Does a Physician Practice Need?


For the success of a physician practice, a comprehensive insurance program is vital for protecting the practice against unforseen loss. The physician needs Professional Liability Insurance to protect the practice against errors and omissions involving patient contact. Also known as physician malpractice insurance, this important coverage is designed to protect the physician and his practice for claims for alleged malpractice in rendering or failing to render professional services.

We will look closer at some of the other coverages available to a physician and his practice.

Business Property and Liability Insurance
A physician practice needs to protect itself against loss to property or a lawsuit based on what he did or failed to do that caused harm to another’s person or property. This type of insurance is usually purchased separate from the physician professional liability insurance policy. A small practice will purchase a Business Owners Package (BOP), which bundles property and liability coverages together and thus reduces the cost of this important insurance. The policy has other protections, like business interruption insurance, crime insurance, valuable records, and accounts receivable coverage. In some cases, exposure such as Cyber Liability can be endorsed on to the policy for an additional premium.

Workers Compensation Insurance
Florida law requires that a physician practice with four or more employees purchase workers compensation insurance. Workers Compensation insurance is normally a separate policy. Rates are set by the State of Florida, and the cost is solely based on payroll. Some companies offer dividend programs for small practices.

The purpose of workers compensation insurance is to provide employees with financial compensation for medical bills and lost wages due to work-related injury or sickness. Workers compensation benefits are paid regardless of who is at fault in the accident. The Employers Liability coverage protects the physician from lawsuits involving work-related accidents or sickness. The physician can elect to include or exclude himself from this coverage. If a physician practice hires another healthcare practitioner, his or her salary is included in the cost of the insurance. The physician practice may wish to make this practitioner an officer and exclude coverage.

Cyber Liability Insurance
With more and more patient health information being transmitted electronically, physician offices face increasing liability associated with cyber risks. Cyber liability insurance is offered as either a stand alone policy or an endorsement to an existing policy.

Recently, there were some significant changes to the HIPAA/HITECH Federal law covering Personal Health Information (PHI) which place more responsibility on the physician to protect the privacy of his patients. The HIPAA/HITECH Federal Law became effective on March 26, 2013 and became enforceable by the Office of Civil Rights and the State Attorney General on September 23, 2013. Failure to comply could result in a monetary fine up to $1,500,000.

The HIPAA (Health Insurance Portability and Accountability Act) HITECH (Health Information Technology for Economic and Clinical Health) Federal Law requires the following items as assurances to safeguard personal health information:

  • New requirements regarding Business Associate Agreements
  • Requirements to provide patients with electronic copies of their records
  • Mandates requiring businesses to have in place the following in regards to protecting personal information:
    • Policies and procedures for maintaining confidentiality
    • Data encryption for electronic health record systems
    • Incident response plans in the event of a data breach

    • Staff training to promote an environment of compliance

According to Leon Rodriguez, Director of the Office of Civil Rights, “These changes not only greatly enhance a patient’s privacy rights and protections, but also strengthen the ability of my office to vigorously enforce the HIPAA privacy and security protections, regardless of whether the information is being held by a health plan, a health care provider or one of their business associates.”

A Cyber Liability insurance policy covers damages stemming from third-party losses and network privacy. For example, if someone hacks a patient’s medical records, the patient can sue the physician for damages. The cyber liability policy would defend and pay any damages up to the limits of the policy. Secondly, the cyber liability policy covers first-party losses. For example, loss or damage to electronic data, loss of a pracitice’s income associated with a data breach, losses from cyber extortion, and notification costs, which can be very high based on the number of patients in a practice. A cyber liability policy will, thirdly, cover media costs associated with protecting the reputation of the physician who has suffered a data breach. In addition, as a policyholder, the doctor has access to services that will assist his practice in creating policies and procedures, provide sample business associate agreements, staff training to ensure compliance in your practice, a monthly newsletter that highlights changes to any state laws, and much more.

Employment Practices Liability Insurance
In the past, employees gathered around the water cooler to complain about the boss. Now they do their complaining at the local EEOC office. Word has gotten out-with extensive media coverage- that a disgruntled employee or former employee can get a settlement for very little effort. And, in a tanking economy, it is even worse. Suing an employer is easier than collecting unemployment. Increased diversity in the labor force offers a fertile field for discrimination claims. With baby boomers aging, age discrimination claims are up significantly. Employers are more vulnerable than ever.

Employment Practices Liability Insurance (EPLI) covers the physician practice against claims by employees that their legal rights have been violated. Examples of such claims include: Wrongful Termination, Discrimination, Sexual or Workplace Harassment, Breach of Employment Agreement, Wrongful Hiring, Defamation, Failure to Promote etc.

Purchase of Employment Practices Liability Insurance gives the physician benefits as follows:

  • Hotline access to employment attorneys from a well-known and highly respected national workplace law firm.
  • Sample employment policies and forms, which can be an invaluable resource for the practice, so the physician does not have to develop such policies on his own.
  • Training bulletins on current employment issues, to keep the Florida physician up on the latest workplace law trends.

Living in a litigious society in a litigious state like Florida certainly has its costs. Insurance to protect the physician and his practice against the employee who knows their rights and has an attorney on speed dial is one of them. EPLI is not an emerging trend. It has emerged!

Working with an independent agent like Gracey-Backer, Inc., which has specialized in the sales and service of insurance for the healthcare provider since 1925, gives the Florida physician the special advantage of having all his policies through one agency. This gives the agent a comprehensive understanding of the needs of the physician and his practice so it can be continually monitored to ensure that adequate coverage is in place.

Barbara Gracey Backer, CIC, is the Vice-President of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Professional and Personal Insurance for the Healthcare Provider. She may be contacted at 800-272-6055, ext 128, or at barbara@gbifl.com.

Barbara Gracey Backer


Barbara Gracey Backer is the Vice-President of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Professional and Personal Insurance. She may be contacted at 800-272-6055 X118 or at barbara@gbifl.com.

What is Business Interruption Insurance?


Business Interruption Insurance (also known as Business Income Insurance) is a type of insurance that covers the loss of income that a business or practice suffers following a covered loss. The income loss covered by the Business Interruption Policy may be due to the closing of the business or to the rebuilding process after a covered loss. The aim of the Business Interruption Policy is to put the business back in the same financial position it was in prior to the loss. Business Interruption insurance is normally added to the Business Office Policy.

What About Coverage Under My Property Insurance?

The property portion of a Business Owner’s Policy does not cover income lost because of a covered loss. Without Business Interruption coverage, a business or practice may not be able to recoup lost profits even though it has insurance to repair or replace physical assets. Any business or practice that generates income needs Business Income Insurance.

What is Defined as a “Covered Loss”?

The definition of covered loss for business income insurance is the same as those losses covered by the property policy—fire, smoke, theft, wind, vandalism, etc.

How Does Business Interruption Insurance Work?

After a covered loss, like a fire, the insurance carrier will ask for information documenting the lost profit. There are going to be some estimates involved, because the profit being documented is anticipated profit—profit the business would have earned based on past months’ financials. The profit being claimed is the profit that would have come during the time that the business or practice is closed due to the covered loss. Clearly the better the record-keeping, and the more stable the business revenues, the better the estimate of lost earnings.

What is Meant by “Loss” Under the Business Interruption Policy?

Business Interruption Insurance is frequently misunderstood. It is designed to cover what the business loses in the covered event, not the total revenue of the business or practice. In adjusting a Business Interruption claim, the insurance company will deduct expenses that are not incurred during the time the business is closed, expenses such as utilities, income taxes, and janitorial. A good way to look at what is covered: the insurance doesn’t consider what your business put in your pocket, but rather what the covered loss took out of your pocket.

What Expenses Will Be Paid under the Business Interruption Policy?

What comes out of the business owner’s pocket during the rebuilding period following a covered loss is net profits plus any continuing expenses, based on historical costs. Insurance, advertising, payroll (negotiable) and other types of overhead expenses will continue to be paid, although these expenses may be reduced because the business is closed.

What Happens if the Business Has to Relocate During the Restoration Process?

Some policies cover the extra expenses for moving to, and operating from, a temporary location. The Business Interruption policy also covers the cost of providing training following an insured event. Extra Expenses are covered, that is, expenses beyond fixed costs that allow the business or practice to continue to operate while the damage is being repaired.

Are Expenses Mandated by a Civil Authority Covered?

Yes. Expenses related to Civil Authority are covered. Examples of this are when the government requires the closing of a business that reduces revenue, such as a forced closure because of a government-mandated curfew or street closure related to a covered event.

When does Business Interruption Coverage Begin?

BI claims are triggered by damages greater than the dollar deductible on the policy. Alternately, coverage is triggered by business shutdown time that lasts longer than the “waiting period” shown on the policy, typically anywhere from 24 hours to 72 hours. Some waiting periods are based on business hours and some are based on actual hours.

How Long Does the Business Interruption Coverage Extend?

Business Interruption coverage goes on until the end of the period noted on the policy. Most companies define this period as beginning on the date damage is incurred and continuing until the damaged property is or should have been repaired or replaced. Coverage can be purchased for an extended period of indemnity or restoration—allowing a business to claim income while continuing to gear up to the level it was prior to the loss. Also available is Contingent Business Interruption Insurance, which pays if a business is affected because of damage to the premises of one of its suppliers, like a power outage at a suppliers’ plant, thereby preventing it from normal operations.

John Gracey Backer, CPA


John Gracey Backer, CPA, is the Treasurer of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Malpractice, Professional and Personal Insurance for the Healthcare Provider. He can be contacted at 800-272-6055 ext 128, or at john@gbifl.com.

What a New Home Buyer Should Know about Homeowner’s Insurance


Most people love buying a new home, but dread the process of purchasing homeowner’s insurance in Florida. First of all, it is complicated and hard to understand—filled with insurance language that is intimidating to even the most seasoned home buyer. Secondly, homeowner’s insurance in Florida is expensive, following a string of damaging hurricanes beginning with Hurricane Andrew. This is not a sexy purchase, especially after you have put down so much money for the cost of your home, closing costs, etc . Thirdly, most people think they will never use homeowners’ insurance in FLorida. (We had a major fire in our house on Christmas Eve 2013, so I know that catastrophes happen.)

As you search for homeowner’s insurance on your most valuable asset, your home, keep in mind the following:

Where do you go to find a good homeowner’s insurance policy in Florida?
Believe it or not, there are many homeowner’s insurance companies in Florida. Which company you eventually choose depends upon many factors—the homeowner’s insurance company’s appetite for your particular risk, the cost of the homeowner’s insurance, and the terms of payment. That is reason to go with an independent agent who represents many different companies. Contrast this with a captive agent, who represents a single insurance company. Through the years, you will want your independent agent to shop your policy. If the agent has access to a wide variety of Florida homeowner’s companies, this is not a difficult task.

How much will homeowner’s insurance in Florida cost?
While, of course, there are many factors that go into the cost of your homeowner’s insurance in Florida, you can expect to pay at least $1,000. Remember, though, that there are several quality homeowner’s insurance companies in the State of Florida vying for your business. You may reduce the cost of your homeowner’s policy by securing a wind mitigation form as well as a four-point inspection. We at Gracey-Backer, Inc. recommend high deductibles, as the chances are you will not report small claims.

If you have filed a homeowner’s insurance claim within the past five years, you can expect to pay more for your coverage. If you buy a home close to the coast of Florida, you can certainly expect to pay more for homeowner’s insurance. And don’t forget about liability coverage and flood insurance, both important considerations in your overall insurance program.

Homeowner’s insurance premiums are generally due when the policy goes into effect. The insurance policy can then be financed over the year or paid out of your escrow account.

Don’t wait until the last minute
We at Gracey-Backer, Inc. recommend shopping for homeowner’s insurance well prior to your closing. Having said this, we have been able to offer our clients some quick turnarounds in a pinch. But generally, you are better off giving the insurance companies plenty of time to offer you a homeowner’s insurance quote. And, you definitely don’t want to be caught in a storm “box” when a major storm is approaching and the homeowner’s companies have shut down for new business. As in life, timing is everything when shopping for a Florida homeowner’s insurance policy.

Itemize your contents
As someone who has gone through a major home fire, I know from experience the importance of taking videos, saving receipts, and generally itemizing major purchases. If you have valuables, it is important to determine their value prior to a loss, rather than trying to determine value after a loss, when you are upset and your brain is foggy. Valuable items include jewelry, silver, furs, guns, coins, art and other collections or keepsakes. Insurance companies offer special floaters for valuable articles. Depending on the item, these floaters are relatively inexpensive and offer broader coverage than found on the basic homeowner’s insurance policy.

The bottom line on homeowner’s insurance in Florida: Deal with an agent who fully understands the market for homeowner’s insurance, represents a stable of fine companies, is straightforward with you about your options, and can handle the complexities of this often-complicated insurance.

John Gracey Backer, CPA


John Gracey Backer, CPA, is the Treasurer of Gracey-Backer, Inc., an Insurance Agency in Delray Beach, Florida specializing in All Lines of Malpractice, Professional and Personal Insurance for the Healthcare Provider. He can be contacted at 800-272-6055 ext 128, or at john@gbifl.com.

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