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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 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

Workers Compensation Compliance

We have recently had a number of Physician, Oral Surgeons and Dentists offices call us in a panic due to a visit from a Compliance Investigator with the Division of Workers Compensation, Bureau of Compliance asking to see a copy of their Workers Compensation policy.

The Compliance Investigator has the authority of issue a Stop-Work order, ceasing all business operations if the employer lacks the required Florida Workers Compensation coverage. In addition, they will assess a penalty equal to 1.5 times the amount the employer would have paid in premium within the preceding three year period.

In all cases we were able to bind coverage for the Doctor/Dentist office the same day we received their call to avoid any unneccesary penalties or stop work orders.

We would like to remind you that if you have 4 or more employees (managing members and corporate officers are used in the count) you are required by law to have Worker’s Compensation Insurance. The investigators do random visits so it is urgent for you to carry this coverage if you are required by statute. Even if you have less than the mandated 4 employee count we highly recommend that you purchase the coverage since it not only protects your employees, it protects employers as well from lawsuits that could result from an injured employee.

The premium is affordable; at $.46 per $100 of payroll and depending on the total premium, you may be eligible for a dividend program which would reduce the premium.

In addition, there is a notice requirement within the statute for offices with fewer than four employees.

440.055  Notice requirements.–An employer who employs fewer than four employees, who is permitted by law to elect not to secure payment of compensation under this chapter, and who elects not to do so shall post clear written notice in a conspicuous location at each worksite directed to all employees and other persons performing services at the worksite of their lack of entitlement to benefits under this chapter.

For more information regarding Workers Compensation or Non-Compliance Violations, please feel free to call us or visit the State of Florida’s Workers Compensation website at: http:/

We are here to serve your insurance needs and provide you timely information to help your business grow and stay strong.

Deborah Vashon, CPCU

Deborah Vashon, CPCU leads the Commercial Lines Department 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 119, or at

Healthcare Facilities and Long Term Care

Gracey-Backer has quality markets for comprehensive insurance programs for healthcare facilities of all kinds throughout the state of Florida. Because quality companies compete for your business, our skilled agents are able to offer you optimal pricing and value.

Our agency offers quality products to the following types of facilities:

  • Assisted living facilities
  • Surgery and Ambulatory Care Centers
  • Long term care facilities
  • Regional Hospitals
  • Rehabilitation Centers
  • Adult Day Care Centers, among others

Gracey-Backer, Inc. has years of experience in writing all lines of insurance, including professional liability, property, workers’ compensation, flood, umbrella and excess liability, business auto. We are not afraid to shop your coverages every year to keep up with market trends.

Please call us at 800-272-6055 for a no-obligation consultation on your facility’s needs.

What is a Personal Umbrella Policy?

Umbrella-PolicyProbably the biggest exposure any of us has is in our personal life is driving in our car and living in our home. Catastrophic accidents do not happen often. If they do, however, the results can be devastating, especially if we do not have enough insurance. We may carry auto and homeowners insurance, but these may not provide enough protection. That is where the Personal Umbrella Policy comes in.

A Personal Umbrella Policy (PUP)covers you for damages and costs you or a family member have to pay if sued—beyond what is covered by your underlying auto, home, motorcycle, boar, RV, policies. For example, if you have a bad automobile accident and are at fault, your primary auto policy will provide the first layer of coverage. Your Personal Umbrella Policy will provide the final layer until policy limits are exhausted. If someone is injured on your property, and the injury requires surgery, the medical bills may exceed the coverage on your homeowner’s policy. Your PUP will kick in until its limits are exhausted.

Who is Covered?

Generally, you, your spouse or domestic partner, and resident relatives who are still dependent upon you are covered. In addition, coverage generally extends to a person using your covered vehicle with permission.

Where is Coverage Applicable?

Depending on your policy, coverage is worldwide.

How Much does a PUP Cost?

The cost is minimal, because the exposure is minimal. Again, depending on the company, you may be charged more because of accidents, tickets, additional vehicles, additional homes, or teenage drivers.

How much coverage do I need on my primary policies?

Generally, you need $300,000 liability limits on your primary auto and homeowner’s policy. If you fail to carry adequate limits, a gap may ensue. You would be responsible for filling this gap.

How do I purchase a Personal Umbrella Policy?

Simply call our office and talk with your Account Manager. Special programs are available for healthcare professionals.

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

Florida Malpractice Medical

The Florida Malpractice Medical Insurance Market Will Remain “Soft” in the Years Ahead

The Florida malpractice medical insurance market remains competitive in 2013. There are several major players in the State of Florida, including The Doctors Company, Medical Protective, Mag Mutual, Florida Doctors Insurance Company and HUG. New carriers entering the state are putting pressure on rates, shrinking Florida malpractice medical insurance company margins. Insurance companies are applying credits: Risk Management, Claims-Free, Society, and Discretionary for larger agents. In addition, some carriers offer loyalty programs to reward its insured physicians for loyalty over the long term.

There has been considerable consolidation of physician offices. Whereas physicians formerly practiced alone or in small groups, they are now joining multispecialty and multistate physician networks. Family Practice physicians and Internal Medicine physicians are being absorbed by hospitals and integrated healthcare operations on a regional basis. This reduction in supply puts further pressure on Florida malpractice medical insurance rates.

The Florida malpractice medical insurance market has traditionally been quite volatile. With a decline in claims frequency and the passage of tort reform laws in Florida, it is now deemed to be “soft”, meaning that premiums are down from highs in the early 2000’s. The Florida malpractice medical insurance landscape will probably remain “soft”, at least through 2016, according to industry sources.

Changes to the Recent Flood Insurance Program

Changes coming for National Flood Insurance Program (NFIP) rates

The Biggert-Waters Act of 2012 has changed The National Flood Insurance Program (NFIP) to fill a $20 billion deficit created by large-scale disasters, such as hurricanes Katrina and Sandy, and to ensure that flood insurance rates more accurately reflect the real risk of flooding. The act eliminates premium subsidies. The greatest impact will be felt by older secondary homes in high risk flood areas.

In general, rate changes will have the greatest effect of properties built before 1975, or prior to the initial flood insurance rate map (FIRM) for the community that are in a high risk flood zone. These homes are referred to as being “Pre-FIRM”. Their rates have been subsidized over the years.

The NFIP flood insurance program has announced a rate increase of generally 10% (varies depending on the flood zone) that affects everyone. Everyone will also see a new charge of 5% to cover the Reserve Fund assessment. Preferred Risk policies in zones X, B or C are exempt from these two increases

The effect of the changes on the other NFIP policyholders will depend on their circumstances:

  • 81% of the policyholders are paying the correct actuarially-determined rate.
  • 5% of policyholders are paying a subsidized pre-FIRM rate. These are pre-FIRM non-primary residences, business properties and Severe Repetitive Loss policies. Their rates will be increasing by 25% per year until the true premium is reached.
  • Not all subsidized policies will see large increases. Obtaining an Elevation Certificate is the best way to determine the true premium. Some premiums will decline, some will stay about the same, some will see a moderate increase and some a large increase. Without an Elevation Certificate, one cannot evaluate the true risk. Note: if you have a Preferred Flood Policy now, this does not apply.
  • 10% of the policies are for primary residences. These policies for pre-FIRM homes will continue to be subsidized until the home is sold or the policy lapses.
  • 4% of the policyholders are in pre-firm condos and multi-family buildings that are primary residences. Their subsidies will continue until FEMA develops guidance for removing the subsidies.

If you need to have an Elevation Certificate, it must be completed and signed by a licensed surveyor. It will certify the elevation of the lowest floor of your home or business. This is especially important if your structure is in a high-risk flood area. A photo of the structure must accompany the Elevation Certificate.

The rate increase will go into effect on October 1, 2013, except for Non-Primary residence polices that went into effect January 1, 2013. This includes units in condominiums and multi-family dwellings.

As you can see, the rules are not straightforward and can vary due to the type building, age of the building, flood zone and more. The general elevation of an area is important, as is the elevation of your building’s slab compared to the elevation of the middle of the road.

It is said that about 20% of all flood losses do not take place in a flood zone. The devastating Colorado floods occurred in an area that was considered low-hazard. We have many areas like that in Palm Beach County. Some are along A1A and some are further inland. In some cases, Preferred Risk policies can be written on homes in these areas at a greatly reduced premium.

For information or advice on this important coverage, please call us at 561-276-6055 or 800-272-6055 or email

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

One question we are asked is “If we haven’t had a hurricane in a while, why are my homeowner’s insurance premiums increasing?

Remember that wind is only one peril covered by the homeowner’s policy. Other perils, like sinkhole and water damage, have also driven up rates. In addition, liability claims have been going through the roof, as more and more people resort to lawsuits to settle disputes.

There are ways to save money on your homeowner’s insurance:

  • Raise your deductible – Over your lifetime, a higher deductible will save you a considerable amount of money. Of course, you risk more out-of-pocket if you have a claim, but you save on your premium each and every year.
  • Buy a newer home – Insurance companies like newer homes, which have less chance of problems with electrical, heating and plumbing. The structure itself is often in better shape.
  • Live in a good location – Near a fire station is good, out of a flood-prone area is good, removed from a body of water is really good.
  • Cover only your structure – A reputable insurance agent will not let you cover the value of your land. Ask for a replacement cost estimator that determines the insurable value. And remember—neither the market value nor the mortgage value is a valid determinant of your premium. You are looking for the cost to replace with like kind and quality.
  • Tailor your contents coverage- A homeowners policy comes with a built-in limit for your personal property, exclusive of high value items. It is important to take stock of what you have to gain an accurate figure for your contents coverage.
  • Be safe—Install an alarm system, smoke detector, and smoke alarms to reduce risk and gain credits. It is a good idea to check with your agent first to see which credits apply.
  • Watch your inflation-guard coverage-Your insurance company automatically increases your dwelling coverage every year to keep pace with inflation. This is to ensure that your home is insured to the rising costs of rebuilding in your area. Over time, this limit can get out of sync with reality. It is a good idea to check it every few years and call your agent if you would like him to run a new costimator.
  • Have good credit – Some insurance companies check your credit score as part of the underwriting process. Good credit means that you will be insured by a better company and pay less for your insurance.

For more information on ways to save on your homeowner’s insurance, call our Personal Lines Department.

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

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