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Tuesday 25 October 2016
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Surgery insurance

To follow is an overview of the key aspects of surgery insurance and what practice managers should look for, and in some cases avoid, when buying this type of insurance.

What is it?
A surgery policy is a package of common insurance covers that are relevant to the needs of a medical practice.
What to look for
A good surgery policy should combine mandatory legal cover – employers' liability – with essential core covers such as public liability, contents insurance and business interruption. The policy should always provide levels of indemnity appropriate for the individual surgery. A dispensing practice, for example, will generally require higher levels of drug/vaccine cover than a non-dispensing practice.

Any practice considering bidding for additional services under the APMS contract should bear in mind the potential requirement for increased public liability cover (up to £25m) and a surgery insurance policy should be flexible enough to cater for the increased indemnity required by the PCT.

What to avoid
Despite the best of intentions, insurance terminology and details of policy cover can sometimes confuse the very people it is meant to protect. Busy practice managers may have limited time to evaluate and purchase insurance but it is essential to get the right level of cover.

It is advisable to use the services of a specialist insurance provider who understands the needs of a GP practice and can advise on the right cover at the right level. Although cheaper forms of insurance may be available on the internet, these policies do not come with the specialist advice and experience behind them and could leave you exposed in terms of policy cover if the worst happens.

Practice managers should look for surgery insurance that includes the following:

Premises (Buildings) Insurance
What is it?
This covers the fabric of the building including pipes, drains, outbuildings, annexes, walls, car parks, pavements, etc.

What to look for
The sum insured should represent the rebuild costs, which can differ markedly from the market value. Even a specialist intermediary cannot advise what an adequate sum insured would be – this should be sought from a qualified surveyor. Remember, even if the premises are not owned by the practice, there may be items normally covered under this section for which the practice is responsible, for example improvements made to the property such as partitions, flooring, etc.

In the event of substantial building/renovation work being planned for the practice, it may be necessary to arrange Contract Works cover. Should the building insurer be unable to do this, a specialist insurer may be able to arrange separate cover, even where the practice is not insured directly by them.

Contents insurance
What to look for
The policy should represent the replacement value of the total contents of the surgery. In addition to the more obvious items of medical/diagnostic equipment, it should also include computer equipment that the practice is responsible for, drugs, vaccines, furnishings, etc – even down to the value of the artwork on the walls.

Practice managers should project their needs across the year, remembering that stocks of perishable vaccines, for example, may fluctuate during the year, so a limit that may seem adequate when the policy is taken out in summer may not be sufficient following a claim in winter.

It is worthwhile making sure that the policy will also cover items taken off the practice premises such as doctors' bags, and that medical equipment given to patients for home use such as BPMs, nebulisers, injectors, etc, are also fully covered.

The practice may be held responsible for damage or theft of personal effects belonging to patients or staff and a high limit of cover here provides peace of mind.

What to avoid
Avoid guessing the sums to be insured. Most policies contain a clause stating that if you under-insure and need to make a claim, this claim will be averaged. So, imagine a practice is insured for £100,000 contents and suffers a major fire, and it transpires that the actual replacement value of the contents is £200,000. The insurer will actually only pay £50,000 as the surgery was under-insured by 50%, leaving the practice to bear the remainder of the loss itself.

To avoid under-insuring, just walk through the surgery, noting the contents of each room and the full replacement value of each item.

Business Interruption
What is it?
This covers loss of income (including QOF) and additional expenses incurred by the surgery in the event of a fire, flood or other insured peril. Cover is commonly extended to include loss of income caused by:

  • Damage to property in the vicinity that hinders access to the practice.
  • Disruption to the supply of water, gas, electricity or telecommunications.
  • Inability to use the surgery due to restrictions imposed by a public authority following:
    • A murder/suicide at the practice.
    • An occurrence of a notifiable human disease.
    • Injury or illness caused by food/drink consumed at the practice.
    • Vermin or pests at the practice.

What to look for
Always make sure the limits shown on the schedule are adequate compared to the surgery turnover. Business interruption claims are also subject to the application of averaging (as described above).

Employers' Liability
What is it?
This protects the surgery from claims made by employees (or former employees) should they be injured or become ill while in your employment and hold the practice responsible. This is compulsory insurance, and the practice must be able to demonstrate that this cover is in place.

Public Liability
What is it?
This covers financial damages and/or legal expenses arising from bodily injury or property damage suffered by members of the public who hold the surgery responsible – for example slips, trips or falls occurring on the premises.

Personal Assault
What is it?
This cover provides compensation (to the limit shown in the policy) should a member of staff be physically injured while carrying out their duties in the event of a robbery or attempted robbery.

Fidelity guarantee
Provides cover in the event of a loss by fraud or dishonesty of an employee.

Legal expenses
Covers the surgery against the potential costs of defending against legal action undertaken against the surgery by an individual or an institution. These costs often include solicitors' fees, barristers, expert witnesses, court fees and any legal costs. Also provides cover for jury service, income tax investigations, etc.

In addition, there are optional covers, which may provide that extra security to a busy practice:

Internet and email cover
Covers damage to the practice website or computer system by a hacker – can also cover against damage caused by a computer virus and the costs of locating and removing it.

Business travel
Covers medical expenses, money, documents, etc, plus compensation for missed departures, delays and cancellations while travelling on practice business (eg, seminars, conferences, etc) – available worldwide.

What to look for
In all cases, the key for practice managers is to ensure that they have the right type of insurance in place with the right level of cover. Policies can vary considerably in the cover available for items such as drugs and vaccines, personal effects, goods in transit, etc (sometimes referred to as "inner limits" within a policy) and it is always worth bearing this in mind when shopping around at renewal. Policies should have sufficiently high inner limits to provide peace of mind for the practice manager.

What to avoid
In our view, practice managers should avoid policies provided by generic insurers as these often have inadequate limits. Although suited to the needs of small offices, they do not always meet the complex requirements of a GP surgery.