Buying a dental practice is an exciting step, whether you’re expanding your footprint or becoming an owner for the first time. You’re likely focused on patient retention, staff transitions, and financial performance. Another important piece of the process is insurance.
Just because a dental practice is currently insured doesn’t always mean the coverage automatically fits once ownership changes. Let’s walk through a few real-world scenarios that may come up during a transition.
Scenario 1: A claim tied to prior treatment from previous ownerships
Imagine this: you purchase a dental practice, transition ownership smoothly, and everything is going well. Then, sometime later, a patient files a claim related to a procedure that was performed before you took over.
At that point, the question becomes how that claim is handled and which policy responds.
This is where prior acts coverage comes into play. Prior acts coverage (sometimes referred to as “nose coverage”) allows a new malpractice policy to respond to claims tied to services performed before the policy started.
Most dental malpractice policies are written on a claims-made basis, which means coverage is triggered when the claim is made, not when the treatment occurred. Because of that, timing and policy structure matter during a transition.
In a practice acquisition, this is typically handled one of two ways:
- The seller purchases tail coverage to extend protection for services during their ownership
OR
- The buyer’s new policy includes prior acts coverage to pick up that exposure
Both approaches are commonly used, and with whatever you decide, you will want to make sure there is not a gap between ownership and coverage.
Scenario 2: Temporary disruption in operations
Next up, imagine a situation where a small plumbing leak occurs overnight and part (or all) of the office is flooded. This forces your practice to temporarily pause patient appointments while cleanup and repairs are completed.
During that time, the focus naturally shifts to rescheduling patients, coordinating repairs, and getting the office back up and running as quickly as possible.
This is where business interruption coverage can come into play. It’s often included in a business owner’s policy and is designed to help support ongoing expenses when a covered event temporarily disrupts operations.
In situations like this, practices typically balance:
- Reduced patient volume during downtime
- Ongoing fixed expenses like payroll and rent
- The cost and timing of getting back to full operation
The goal of this coverage is simply to help bridge that gap while operations return to normal.
Scenario 3: A staffing-related claim
Now consider this scenario: after you acquire the practice, you decide to update the team structure, responsibilities, or day-to-day operations.
During periods of change like this, employment-related questions or claims can sometimes arise.
This is where Employment Practices Liability Insurance (EPLI) becomes important. Depending on your specific coverage, EPLI may help respond to claims that involve one or more of the following:
- Employment decisions like termination or discipline
- Allegations of discrimination or harassment
- Wage and hour disputes (subject to endorsements and exclusions)
- Retaliation claims
It’s not always top of mind during a practice purchase, but it can be an important part of the overall insurance picture, especially when employees are part of the transition. Working closely with a licensed insurance broker can help confirm your coverage meets your practice’s needs.
Don’t Skip the Insurance Due Diligence
Before finalizing a purchase, consider:
- Requesting full copies of current policies
- Reviewing claims history
- Identifying any gaps in coverage (especially prior acts, interruption, and EPLI)
- Aligning coverage with your growth plans for the practice
Final thoughts
Buying a dental practice comes with a lot of moving parts, and insurance is one of those areas that’s worth reviewing early in the process. The goal isn’t to overcomplicate anything, it’s to make sure the coverage in place matches how the practice is being owned and operated moving forward.
A simple insurance review during the due diligence or transition phase of an acquisition can help lay the foundation for a smoother start under new ownership.
This content is for informational purposes only and does not constitute insurance, legal, or financial advice. Coverage needs vary. Consult a licensed professional.