Professional Indemnity Business Entity Cover: Don't Risk Exposure!

In the past, doctors operated as sole practitioners and practiced under their own name, and as such their individual medical indemnity insurance extended to cover their business entity as well.


In the past, doctors operated as sole practitioners and practiced under their own name, and as such their individual medical indemnity insurance extended to cover their business entity as well.

However, in current day practices we see a range of different company structures that may impact whether the doctor’s individual indemnity extends to cover the business entity and its staff.

Insurer Example

Definition of insured:

The healthcare professional named as the insured on the policy schedule, and if that insured is a sole practitioner and wholly or jointly owns the corporate entity with a spouse, a person that does not provide healthcare at, or are involved in the daily operation of, the practice or a trust which they are a beneficiary of, then the insured’s practice entity.

Definition of practice entity:

A corporate entity where you practice as a sole practitioner and which you own and control, either solely or jointly with a spouse, a person that does not provide healthcare at, or is involved in the daily operation of the practice, or trust which you are a beneficiary of.

What this means:

Unless you are the only doctor working in the practice and there are no other medical practitioners’ chances are your individual medical indemnity policy would not respond to any claim made against the business entity or any of its staff.

Here is an example:

Dr Smith runs a GP clinic under business entity Dr Smith Pty Ltd. Dr Smith Pty Ltd is 50% owned by Dr Smith and 50% owned by his spouse. Dr Smith Pty Ltd employs a receptionist and a nurse and there are no other medical practitioners involved in the practice. Dr Smith Pty Ltd purchases the medical supplies and the nurse uses an infected syringe to inject a patient. As a result, the patient suffers a loss and acts against the nurse and the clinic.

Under this structure Dr Smith’s individual indemnity insurance would most likely respond to the claim made against the business entity and the staff member.

Where the issues can arise is when there are other medical practitioners working at the clinic. If Dr Jones is added to the clinic, then under the above definition of the Insured, cover would not extend to the Practice Entity and therefore the staff, leaving Dr Smith Pty Ltd exposed.

With the changing landscape around medical practices structures and many medical practices assuming that their practice entity is covered under their individual indemnity policy it is easy to overlook these exposures.

iMed Insurance can provide an expert review of your:

  • Cyber Insurance
  • Practice Imdemnity
  • Professional Indemnity Insurance
  • Business Insurance
  • Management Liability Insurance

We will ensure both you as an individual, along with your business entities, have adequate covers in place.

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