00:00:00:00 – 00:00:51:15
Jay Shorr
Welcome to Shorr Solutions: The Podcast. I’m your host, Jay Shorr. I’m the CEO and founder of Shorr Solutions, a national and award-winning consulting firm, assisting aesthetic and surgical practices with their operational, administrative and financial success. I have an amazing team of practice management experts and clients across the U.S. and as an industry expert with firsthand experience owning a multi-million-dollar cosmetic dermatology and plastic surgery practice. Listen in as I lend you my expertise and best tips to successfully manage and grow your aesthetic practice. I will also be bringing in guests along the way, so get ready to be equipped to operate your aesthetic practice strategically and profitably. Welcome to Shorr Solutions: The Podcast.
00:00:51:15 – 00:01:36:12
Hello, once again and welcome to Shorr Solutions: The Podcast, and I’m your host, Jay Shorr. Today we have a real interesting set of questions and answers. And the first one is what type of insurance does my practice need? How am I supposed to know that? Well, you’re going to have to figure it out. You’re going to have to learn it. You’re going to have to have trusted advisers. You’re going to have to get a good insurance agent. You’re going to have to get a good insurance broker. And you’re going to have to learn to know what you don’t know.
00:01:36:14 – 00:04:05:18
So let’s get started. What type of insurance does my aesthetic practice or any practice for that matter, need? Well, let’s talk about insurance for an aesthetic medical practice, because there’s many areas to consider the insurance that your business may require. There’s other types of insurance to consider. What are the reasons for insurance? How do I even select a policy, an agent, a broker? What do I do after I purchase insurance? So let’s talk about that for a second. Insurances that my business may require. For example, if you are a doctor, a nurse practitioner, a physician, associate physician, assistant, you’re probably if not definitely going to need professional liability, commonly known as malpractice. Now, not every state in the country requires you to have professional liability or malpractice insurance. And you’re probably saying, Jay I’ve never heard of such a thing. Well, let me share something with you. I reside and work in the state of Florida. And if you are a physician or you are a practitioner, you don’t need to have professional liability insurance that you have to pay for. There are several options. One. Have professional liability insurance or we’re going to get into the amount of coverages because the coverages vary from state to state directed by the boards of medicine. And in Florida, you can purchase a professional liability policy, or you could be personally, financially responsible by telling the Board of Medicine that if in the event that there is a claim, you will physically pay it, or you can post a bond or an irrevocable letter of credit to the Board of Medicine stating that you will be able to cover the professional liability. Now, the professional bond or the line of credit is much less expensive than an actual policy. So if you don’t have a claim and you don’t need to purchase it, you don’t have to have a premium paid. And the last thing here is that if you decide to self insure in the event that there is a claim against you and you can’t afford to pay it, you will lose your license in the state of Florida.
00:04:05:23 – 00:04:37:19
Now, you can save a lot of money. So what are the things to consider and what are the reasons for insurance? Quite frankly? The reason for insurance is the word protection. Protection, protection, protection. We’ve heard that PPP: payroll protection program, policies, procedures, protocols, safety reasons for insurance is for protection. You have to make sure that you’re covered in the event of an unfortunate situation.
00:04:37:21 – 00:07:26:21
Where do I get insurance? You get it from a licensed agent or broker within the state or commonwealth that you work in. What do I do after I get insurance? So let’s talk about that for a second. Here are all the different insurances that your business may require. I’ll run through them very quickly, but we’re not going to go through them all. Could be general liability, which includes bodily injury and property damage, tenant and improvement coverage, which means it will cover your shelving, it’ll cover everything that’s built-in your flooring, your walls, vehicles that you may own or rent. Professional liability, which is the malpractice that we just spoke about. The coverages will have to determine no matter what state that we’re in, because Florida has different requirements than other states. If you’re in Florida, the Department of Health, Medical Quality Assurance, Form 1014. That’s what I was talking about, that you have to notify the state for your profile on the board of medicine, and that’s called going bare if you want to self-insure. Then there’s worker’s compensation, employment practice, liability insurance, cyber insurance, and anything that you have that may spoil in the event of a storm, a loss of electricity and surety bond insurance. There are others, trust me, there are others. Business owners, insurance, auto errors and omissions, data breach, life insurances, product liability insurances. I can go on and on. But there are government regulations because insurance is governed by your individual, state or commonwealth. So before an insurance company can actually even increase premiums, they have to file the request with the State or Commonwealth for approval. Now, here in Florida, it’s probably the one of the worst in the country. I’m not going to blame government. I’m not going to blame the governor. I’m not going to blame our senators. I stay out of the politics. However, there’s a reason for it because Florida is riddled with hurricanes and they’re riddled with all kinds of storms and shutdowns and things like that. And therefore, the losses are so great that the insurers need to recover. It’s going to happen with California with all the wildfires, too, if it hasn’t already. Now, professional liability insurance that varies from state to state and commonwealth to commonwealth. Depending about whether or not you have hospital privileges, operating room privileges, etc..
00:07:26:23 – 00:11:54:13
So is your business required by law to cover any of these types of insurance? And if it’s not required, should you carry it any way? And why? So let’s talk about the first one. Liability. What does liability really mean? The word liability in all insurances means bodily injury, property damage. Do not mix the two because there are different types of limits. Some carry only amount for bodily injury and others for property damage. Or that’s called split. Limit liability X amount for bodily injury. X amount for property damage. Or you can have another type of coverage in your policy called combined single limit CSL. And that means that your coverage is an aggregate of whatever your coverages 100,000, 300,000 a million and includes bodily injury or property damage. Instead of segregating it out.
Worker’s compensation. So what’s worker’s compensation, Right? That word worker’s compensation. Worker’s compensation is an insurance required by law, depending upon how many employees you have. And worker’s compensation protects the worker. The employee from companies who might not otherwise pay in case of an illness or a work related injury worker related illness or work related injury. So what could a work related illness be? Mesothelioma. It could be poor air quality. And you got mold in your lungs. If there was mold. And it could be anything. Injuries. Slips. Trips. Falls. All right. That’s a worker’s comp that allows you, the employee to be paid, your hospital bills paid in the event of an unfortunate circumstance. And depending upon the state that you’re in, you will also be paid for your labor that you miss. And I’m not going to get into all the details. We’re just explaining the types of insurances. I’m not going to actually give lessons on coverages.
And then unemployment insurance. Unemployment insurance is governed by the state and federal government. However, only the employer. Not the employee. The employer pays it contingent upon the amount of payroll, meaning that X amount of hundreds of dollars of payroll. The state and the federal government will charge the employer a specific amount of money based on individual, state and federal government requirements. They’re not the same. All right. And what ends up happening is in the unfortunate situation of layoffs, involuntary terminations, then the employee may be entitled to governmental financial assistance from the state and or federal government like we had during the pandemic.
Another type of insurance, disability insurance. Any event, you as a business owner or even an employee, become physically mentally disabled, whether it is from an illness or an injury, providing that you have a policy you will be able to collect, whether it is short term or long term disability predicated upon the policy type that you have. Not all policies are created equal. So, for example, if you get hurt and you are disabled three months, six months, there may be a 30 day wait, a 60 day wait. It might be automatic if it was an injury versus an illness. So how much do I get, Jay? Well, that depends on the type of premium that you’re paying for that type of policy coverage and the limits that you bought within that coverage. We might be able to get into that a little bit later.
00:11:54:15 – 00:12:33:22
So key person insurance. So who takes key person insurance? Basically, business owners and partners. Here’s why. In the event that an owner they call a key man insurance, it should be called key man key woman insurance now. But in the event that one of the owners or major providers has to go out of work or their disabled or they die, if that then becomes the case that the insurance company will pay to the owner of that policy, key person, insurance or whomever that beneficiary is to cover the losses. Basically of the revenue or the work that that key person would normally be doing if they’re not available.
00:12:33:23- 00:13:52:22
So worker’s compensation, insurance accidents happen. That’s why we purchase worker’s compensation insurance. False. All claims are denied. No. All claims are not denied. All illegitimate claims may be denied. So the role of the employer is to protect the employee by having good, proper OSHA standards. Stay tuned for another episode of Shorr Solutions: The Podcast, where I go over Occupational Safety and Health Administration, commonly known as OSHA. So we protect you from you in spite of you. But Worker’s compensation insurance protects the employee in the event of an unfortunate situation. So the different types of employment insurances that we have, are commercial natural disaster and theft don’t get property insurance. They said you’ll never need it. Yeah, well, whoever thought that a building could fall down. Natural disasters and theft.
00:13:53:00 – 00:15:02:19
Tenant and improvement insurance commonly known as T and I. So when you go in to rent a facility or you want to buy a facility, usually when you rent, there is a thing called you actually pay a premium for X amount of dollars per square foot, and then you’ll have an extra fees, whether it’s triple net. Kind of like a homeowner’s insurance type of premium that you pay. And then if you want and you want to do build out, you ask the landlord what they call TNI or tenant and improvement insurance, I’m going to rent from you for five years. I’m want to rent for you for ten years, and therefore I want X amount of dollars per square foot because I have to spend a lot of money. And in the event of a loss of fire, of flood and all of that gets damaged, I want to know that I’m going to be able to be compensated to rebuild. That’s tenant and improvement insurance different than the equipment that may have been damaged or stolen or damaged because of a hurricane or a power surge or was just plain stolen.
00:15:02:21 – 00:18:02:06
So it’s coverages in your commercial policy that will help you to repair and replace. But there’s different types of limits. One is actual cash value and the other is replacement. I always say get replacement because actual cash value will only pay you what you could buy it for. In today’s marketplace example, I bought a piece of equipment, a laser. I’m not going to mention any names and the piece of equipment was $150,000 when I bought it. And three years later, the insurance company is going to tell you, Well, but it’s only worth $35,000. I see it on eBay. Then the answer was, B, I want you to replace that laser. So what they’ll do is they’ll have to replace it, not necessarily give you depreciated expense. And if you have any inventory in stock that gets damaged, then you’ll be able to get it replaced. Let me give you an example. In my former practice, we had a hurricane and we lost power here for a couple of weeks. And there are products, no names that I’m going to give you, but there are products that have to be refrigerated. Lo and behold, we lost power and the refrigerator went down and we lost all the product that was in the refrigerator. Thank goodness the insurance company covered it. However, because I had the insurance to cover that, I also had the guarantee from the manufacturer that if the insurance company doesn’t cover it, that if I send them a denial of coverage, then the manufacturer would have covered it under good graces because of the amount of volume. Do not count on that as your telltale. I would always make sure that you have proper insurance coverage for it. So the professional liability insurance covers negligence as it pertains to the professional services that you provide. All right. The general liability, on the other hand, is coverages for bodily injury and property damage or one or the other. All right. Or a combination of both. And the general liability. However, the professional liability malpractice only has coverage for what you physically do and damage and or hurt a patient. Now, whether they prevail is another story that then goes between the insurance company and what we call the plaintiff, the person that might be suing you and or your insurance company, your insurance company that that you were insured with for your professional liability has counsel and will defend you. Be careful. There may be deductibles if you self-insure, you’re going to be out of pocket for all of that.
00:18:02:08 – 00:18:32:04
Other types of insurances are surety bonds, surety bonds are guarantees of perform that you’re going to do something and somebody might ask you to put up a surety bond. What you do is you buy a bond, a surety bond either from a bonding company or an insurance broker who will guarantee that the coverage exists in the event you don’t do the performance that you were contracted to do.
00:18:32:06 – 00:19:32:12
Employment practice, liability insurance apply and cyber are probably one of the two coverages that people really don’t think is worth the money until you need it. So in today’s ever pressing society, in the Me Too movement, You Too movement and everything else. EPLI is in the event that somebody, an employee, wants to accuse you of something that you may or may not have done. So they want to make sure that, look, employees are entitled to rights too, and they should be protected from unscrupulous business owners. But in the event that the business does something wrong to violate either the personal or civil or equal rights of an employee, they’re going to sue you. And if you have employment practice liability insurance, then you’re in good shape.
0:19:32:18 – 00:20:41:21
The next cybersecurity many, many years ago, people didn’t want cyber coverage because the electronics and the World Wide Web was not what it is today. But now, with cyber and the hackers and foreign governments hacking into your systems, I will tell you, if you get hacked between the HIPAA the violation and all of the important information that you have on your patients, there’s going to be some severe damage. And what you’re going to do, you’re going to get sued. And the insurance policy that you have for your general liability that only covers you for $10,000, $25,000, which is the free coverage isn’t going to be free enough. All right. So, therefore, I urge you to get $1,000,000 of cybersecurity insurance coverage. A, It could be just ransom to get your information back. B, to scrub your computers, get rid of the viruses, and C, make it right for any damage that might have been done.
00:20:41:23 – 00:22:21:03
Business interruption, insurance. What is that? It’s in the event that your business is interrupted, just like it says, due to a named storm due to an illness, an injury or a disability of the owner. Any reason, a storm, a fire, you name it. Guess what? There was a thing in 2020 called a pandemic, COVID 19. And you know, a lot of businesses weren’t covered. Why? Because in the policy, it didn’t cover pandemic. Why? Pandemic? What’s a pandemic? Who even ever thought that a pandemic would even exist? That was something that happened back in 1920, not 2020. All right. So now that we know that now insurance companies are offering pandemic insurance years ago, they didn’t have all these active shooter types of insurances and these catastrophic events. But now, of course, you’re going to have that. So with the business interruption, insurance, make sure that you have it for injury, disability, death, spoilage, fire, hurricane, storm, any types, maybe even if you have coverage, if your business was broken into and did such damage that you could not operate your business. But there are caveats in the policy. So I’m not your insurance broker. I’m just telling you what coverages exist.
00:22:21:05 – 00:23:28:21
Next is an umbrella insurance. You don’t buy an umbrella insurance to protect you from the rain. Ha ha. What you buy umbrella insurance is to cover you from above and beyond the liability coverage in the policy that you obtained. That general liability policy example. I have personally an umbrella insurance. How much doesn’t matter? But it covers me for X amount of millions of dollars above what my general insurance and my auto insurance provides the coverage. But you have to maintain a certain amount of minimum coverage before the umbrella kicks in. Why do I have that? Because heaven forbid, I am sued for something in excess of my coverages. Now the umbrella kicks in, but only and only after my primary coverages have been exhausted. It is not a primary policy. Is a secondary policy.
00:23:28:23 – 00:25:35:09
Good faith and advertising insurance. In the event that you advertise for something and you can’t hold up to it and you have good faith advertising and you are sued, then it could be that the insurance company will cover it. I want to give you an example of something. I don’t know if anyone has heard this, but Reece’s Buttercup is being sued. Now, you could say to me, Why do you even bring up Reece’s Buttercup? Well, there is a story out there and you can look it up. I’m not making it up that Reece Buttercup advertised on their wrapper. All right. During Halloween, that their buttercup would look like pumpkins or during Easter. They had a cover of Reese’s Buttercup of Easter Bunnies or Christmas trees on Christmas. And guess what? That’s what the wrapper showed. And when the person opened it up, there was the cylindrical Reece’s buttercup. This is not an advertisement for Reece’s Buttercup, but somebody got an attorney and said, This is fraudulent advertising. I bought these Reese’s Buttercups because I thought I was getting pumpkins, Easter eggs, Easter balls, Christmas balls, whatever it is. And it wasn’t. Now, where this case will go, I have no idea. But is it a legitimate case? Well, if somebody thought they were getting something due to an advertisement and it wasn’t. Therefore, you have to be careful, especially in medicine, because you cannot at least in Florida, you cannot advertise. You are the best doctor. I am the only I’m the number one. Unless you have proof to prove it, I can say I am a multi award winning consultant. Can somebody sue me? No, because if you look behind me, I have awards that I’ve won as a consultant, and therefore it is now legitimate, whether it is oral, written or electronic.
00:25:35:11 – 00:26:22:21
And one of the last ones, product liability insurance, is in the event you sell a skincare product or you do a treatment that was performed by a radio-frequency device or you ejected a bad neurotoxicin or dermal fillers and the product itself was bad. Yes, you’re going to get sued. And then they’re also going to enjoin the manufacture facturer of either the machine or the product as a codefendant. And who wins the one with the deepest pocket, Really? So what would happen is you’d have your malpractice insurance and then you’d have product liability insurance, and then the manufacturer would also come in. And it’s just a mess. You don’t want to be in it. All right.
00:26:23:01 – 00:27:43:20
And the last thing, there’s a thing called an accord certificate. It’s called a certificate of insurance, commonly known as a COI. What is that? That is a document that many companies, when you buy something and you owe and there’s a lean on it, they want to know that you are properly covered and what a certificate of insurance shows is. Who is the producer, number one, who is your agent? Who are the insurance company carriers that’s in the upper right hand side, right in the middle. It shows us the name of the carrier, the types of coverages, your policy number, the date of the policy’s start, the date of the policy expiration and the amounts of coverages. And then it also has a description of who is maybe possibly named as an additional insured and or loss payee that my friends in totality in a short Clift Monarch Notes edition is What types of insurances does my aesthetic practice need?
Thank you for joining another episode of Shorr Solutions: The Podcast. I’m your host, Jay Shorr. Good luck. God bless.
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