Phil Cole 0:10
Hello, and welcome to class solutions dental education Podcast, the podcast series where we share knowledge and experience to provide value to you in your dental practice. I'm your host, Phil Cole, and I'm with my co host, Chris Webb. And in today's episode, we'll be talking about business or practice insurance. I'm joined by Nelson dicy, Vice President at Williams, who will be sharing his thoughts and we're going to drill him a little bit on what's the best insurances what you should be concerned about. And we're going to look through and have him give us his experiences too, as he deals with a a ton of health care professionals in this so Hello, and welcome, Nellis to our podcasts. Oh, thank you for having me, Phil. And, Chris. Really pleased to be here. This is a great opportunity. So give us give us a little rundown on yourself and and dicey Williams. Yeah, Daisuke Williams, we're based in Minneapolis, we're a nearly 90 year old agency, I'm really proud to be the fourth generation kind of carrying on this tradition of working with business owners to kind of navigate insurance coverages and surance has changed a lot over the nine years, and our agency has to but we're, we work with clients now throughout the country. And our main focus of our practice is is focusing with healthcare practices, and specifically dental and oral surgery practices, makes up a majority of our client base. Awesome. Yeah. So I mean, you always want us in the dental industry, we always are getting questions of, you know, should I work with an independent agent versus, you know, should I go to the big firms and stuff like that? So just give us a little idea, what does it look like when we're working with an independent insurance agent and the benefits? Yeah, you know, a lot of the times, that's a good question.
You know, most of the time when I work with practice owners, a lot of times they're new practice owners, buying business insurances and practice insurances for the first time. And a lot of people are familiar when they purchase insurance, a lot of people work with a direct agent. And within the insurance business, there's a lot there's kind of two basic types of agents. There's there's agents that are direct agents or captives, they work with one company and specifically represent one company. And then there's independent agents and independent agents are, are more common in business, insurances and independent agents are not the insurance company themselves. We're essentially a broker. And we work with a variety of companies. And business insurance tends to gravitate towards independent agents, because they have more solutions. Every business is different. Every every client needs different insurance needs. And so it's helpful to be nimble, to be able to go to a variety of companies to put together a custom program. A common misconception I've heard this previously is sometimes you know, what about an independent agent? Are they going to be financially capable to handle a claim? And I think a common misconception is as agents, we're not the insurance companies. So we represent fantastic insurance companies. And we're the agency that helps put together service the insurance help place it help navigate, renewals, and, and honestly make quality risk management guidelines or guidance for our clients. But we're not the insurance company themselves. We are paying the claims we aren't handling billing for the most part. So as your questions we'll get a few questions like that, I suppose. Not a few. Yeah.
We work with a lot of different companies. And there's all different there's really every type of business has insurance companies that are that are specialized are really geared developed programs specifically for those types of businesses. So for dental offices, there's some really fantastic companies out there to insure them.
Phil Cole 4:15
So now, just to be clear, too, with your company, your brokerage firm, you're you're dealing personally with the business or the practice insurance, but you also then do have the ability to handle the personal side of things too, as far as in the disability insurances and stuff like that, as well. Correct?
That's right. Yeah, our agency has is a pretty broad agency, and we've really kind of geared ourselves to be able to handle one specifically for small business owners. So we're designed to handle all the different coverage needs that you might have. So from the practice, insurance, business insurance side, we have a departments solely focused on servicing the needs of our dentists and practice. as owners for their personal insurance needs home, auto farm, all of those sorts of life, disability, all those sorts of exposures and needs, and we have a benefits department as well, that handles employee benefits plants. So we're pretty, pretty broad based. But we're, we're unique in that we have focused our kind of target client in terms of health care, and really focusing on health care clients specifically.
Phil Cole 5:26
And that's awesome, because for us, that's one of the things that we're really passionate about is making sure that that I think the biggest mistake that dentists make, or the healthcare profession, I guess, in general makes is just the simple fact of they deal too many times outside the scope, with people outside the scope of their business. And the dental industry is its own monster, right? It's it's not as easy as owning $1 store. And I think that sometimes there's too many times that, Chris, and I know that we've dealt, and I always throw this one, the one that I always love the most is dealing with weed out deal with a lawyer once on doing a practice transition. And, again, it was a bankruptcy lawyer because that was their neighbor. It was a lawyer, and we really trust him. And it's a bankruptcy lawyer. And we spent probably two months on trying to close that practice educating him, and how a dental practice transition works. So once again, it's really for like I said, for us very important for us to deal specifically and get our clients and get the dentists out there to understand deal with dental specific businesses, because that's when you when that's all you do. You you have the experiences and stuff to know, and see those hiccups. And you know how to respond to them versus a bankruptcy lawyer that says I've never done this before. So why is this in this contract type thing? You know? Yeah,
we're the real estate agent that does mostly home homeowner, real estate, you know, residential real estate and handling healthcare, real estate transitions.
Chris Webb 7:04
You know, now you're speaking my language, we can go into that all day.
I think I didn't, I didn't start right away. This is my family business. I honestly, to full disclosure, I didn't know I was gonna get in the insurance business. And I worked in nonprofits for many years after college and been in the insurance business now for nine years. And I think one of the really cool pieces about the insurance business is you the everything is based on a really good relationship. And it's in its relationships with your clients, long term relationships. Insurance is, at times, because of some of the advertisements you see on TV and radio and whatnot, has a reputation of being transactional. It's a very, like, I need a policy today, I need to get it done. I need it, I'm buying a new house, I'm getting a new car, I need a policy for it. But the relationships that we form our long term relationships, and it's pretty cool, very rewarding to carry on that tradition and have clients that my grandfather worked with, continue to work with us. But there are relationships throughout the industry, with other professionals like yourself that are that are focused, and it just makes the whole process much more enjoyable. Sure, any attorney can help put together a deal, it might not be the most graceful and it might not come together that well. But the deal will be done. But there's no there's no reason to struggle through it. There's people that are experts in this area, it's it really is helpful to kind of network and find those. And I've enjoyed being part of I kind of think of myself sometimes is with small business owners, kind of being part of their mini mini board of directors and they and working together with their legal team and their their finance team and their accountant to kind of come up with solutions and help navigate set the practice up long term for success. So
Phil Cole 8:57
kind of think of it.
Chris Webb 8:58
Yeah, so kind of kind of going back to that reference about the about the attorneys, you know, you're also paying them and you're paying them to learn it. So the cost to you upfront, Cash Wise is higher, but then you also have more costs in the fact that they're going to miss things, right? They're not they're not going to know what specific things to look for that dental professionals deal with that other professions don't. And so, kind of tying that into insurance. What are some of those things that you see, when you're when you're helping quote somebody and get them set up with the right, the right amount of insurance, the proper coverage? What are some of those things that you're seeing that maybe another another place? Wouldn't? And that kind of sets you apart as as kind of a dental insurance provider? Professional?
Yeah, you know, I think we have a little bit of a we're seeing a lot of different dental practices. And we are and because of that we're familiar with a lot of the equipment with a lot of the build out costs that are going And that are being involved with that. And so I think we have a little better scope and looking at their property coverage. And we do a pretty detailed job to work through and understand how the practice is built, what types of exposures might be the air? Do they have neighbors upstairs, do they have, or next door that might cause additional claims or add an additional exposure? All of those sorts of things. So definitely focus on that that equipment side we have a little bit I'm not a equipment specialist, but I understand kind of what are some of the costs, and I think that's something that usually gets missed. The other side of it is because we're seeing claims are contrary to popular belief insurance companies do pay claims. And so I do see a lot of claims. And, and because of that I start to our our agency, I think is intimately familiar with the real exposures. And I think, no, having that background of seeing checks, got the dollar out the door for certain claims that are happening, it really does give us a better understanding of coverages to recommend to help future practices, make sure that they're, they're protected for that things like water losses, water losses are probably the number one claim that we see from a property loss in dental practices, there's so many tiny water lines that are running all through your all through your practice, from the autoclave to the dental, the the chair side, instruments, you know, there's a lot of waterlines that are going through the through the practice and those fail. Unfortunately,
Phil Cole 11:38
that's interesting that you brought that up, because that's what I was going to ask you what would be the what would be the number one claim, and I was, I was gonna say, water's got to be up there. Because in my, in my years of experience in the dental career, I don't know how many times I've, you know, doctor goes in, and there's three feet of water in his practice when he showed up on Monday morning, because, you know, a hose broke or a valve, you know, gateway or something like that. So, it's interesting that you bring that up as being the most popular.
Yeah, I had a pretty bad week, a couple of weeks, where we had a number of water losses happening with different practices throughout the country, that they're all were water claims, whether it's in toilet overflowing, or the neighbor upstairs, you know, medically medical building, you have somebody coming down, water's coming down, always is going to flow downhill. So yeah, they water losses from a property loss is definitely one of them. You know, one of the things that we're because we're looking at all angles from a property loss, what is the total exposure for a practice, it's important to get the right property levels and make sure that coverages, the things that I see miss the most is how coverages name and a need to make sure that you are using the correct name insured on all your policies, it shouldn't be the building name, specifically, the building or the practice name needs to be listed on the policy in order to make sure there's coverage. And sometimes what I see is that it's listed in the individuals name when they have an LLC set up, or they have a PA set up and it's not correctly named on their policies. So I do see that missed quite a bit.
Phil Cole 13:13
So does that does that cause then that is that where you start to? Because if someone didn't pay attention to that, or didn't notice that is that where you hear the horror stories of like you mentioned insurance claims not paying out because they didn't have their insurance filled out properly. Yeah,
or they miss an exposure I've had I've had it where maybe somebody goes online and sets up their own coverage and they want the mailing and billing address to go their home. And they inadvertently set up so they're insuring their commercial building, but it's their home address as the insured premises. So making sure all those those they're the devils in the details, making sure you've got the right premises insured most insurance companies are pretty good at looking past some of those things when they can truly see that there was an intent but there's no guarantee and things are definitely getting tougher for insurance companies where they're not going to be handing out claim dollars if they're not legally required to if they're not if there's not in the contract. So it's a car insurance policy is a contract and I think people forget that sometimes is that you know the policy language that's all legal legal work so this is we will pay for this premises when it's damaged or this condition or you know, these these types of losses causes a loss and that's that's where things can get nasty a little bit.
Chris Webb 14:40
If you guys have you guys seen where maybe based on like content, like content insurances on on a leased premises where maybe they didn't have the coverage they were supposed to, you know, according to their lease. Do you ever run into that and how do you avoid that then?
Yes, So one thing we do a careful job of in for lease spaces is we'll look through their, their actual lease. And I always make I'm not an attorney, I'm not a realtor. But I'm an insurance agent, there's there's insurance requirements embedded in your lease that you're, you need to make good on, even if somebody says, Oh, landlords are great about asking for proof of coverage, but most every lease has an insurance requirement in it. And just because they don't ask for proof of coverage doesn't mean that they're not going to make sure it's there if there's a loss. So oftentimes, I see, especially in large medical buildings, or more like shopping center type locations, high high traffic, kind of retail locations, lease spaces, they'll have high liability requirements, higher umbrella liability requirements, specifically, those things get missed. Other times, not so much in the Midwest, but in other parts of the country, lots of times, what we'll see is triple net leases, where the practice is actually required to insure the building, even though they don't, they don't own the building, but part of their lease is just that they're they're going to insure the building. And instead of paying it out in like a cam, I would be under a cam fee or something like that. So So those definitely the insurance requirements are really important component. In other parts of the country where earthquake or flood coverages are required by leases, Those typically are uncovered in a lease requirement.
Chris Webb 16:29
Phil Cole 16:30
So I have a question for you then. When we so one of our most popular things that we get a lot right now is startups, right. So in doing a startup, when you're looking, one of the things that we'll do is a demographic search to find, you know, in a feasibility study to find out if this is the right place to put a practice, right, then once we find that place, now we look for the for the real estate. So let's say that we found a real estate where it was a strip mall, all side by sides, one stories, right, versus a high rise that has six storeys, and the fourth floor has the suite. That's open, would it? Are you saying then if the way I'm reading it, or the way I'm envisioning it, as are you saying that that's going to be a tougher one or more maybe a more expensive one to insure since the water can run downhill? Or is that not? Is that a misconception that someone shouldn't worry about?
You know, I think it's going to be pretty much on a case by case basis. But I would say the things that underwriters are looking for is quality of construction, the quality of the space, and what types of controls they have in place. So, you know, each each one of those locations has some unique exposures, you know, you might have a little bit of a higher frequency maybe of a potential water loss from an upstairs tenant coming down on you in a multi storey building like that. But what you gain is probably a fire sprinkler system, probably well maintained, very solid construction, like a really high high fire resistive construction type. So you you kind of gain some things there. So there's a little bit of trade off some of the the other unfortunate claim that seems to be a trend with dental offices, and I don't know what it is. But for the drive up the standalone real estate are the ones where you can park right in front, we have had, I have a lot of cars that get pulled out of waiting rooms, unfortunately. So a lot of people are missing the reverse lever on their car and going right into the practice. So they have their own exposures. Every every business has its own en cup of tea, so but every when we look at that we gather all that information, property information, you're built, kind of what's going along with it. I would say it is important though, to look at your neighboring tenants and underwriters do look at who are your neighbors. And there's no judgments here. But if your neighbors are tattoo shops in a gun store versus an orthodontist and a dermatologist, the underwriter looks at that differently because they understand who's going to be walking by and in that area of the brand. Practice a lot. So that's kind of an aside.
Phil Cole 19:24
Yeah, that's amazing. I would have never, like I said, I would have never thought of it being that specific. But that is awesome to see that.
One thing I think that that commonly gets missed and I think there are a huge amount of property levels with a dental practice, even lease spaces 3000 square foot practice it wouldn't be unheard of to have a million dollars of property to replace. And I think a big misconception is because you're getting a list of assets from the seller. Most oftentimes it's prepared by a CPA or another firm that's that has a depreciated list of assets When an insurance company goes to insure it, and when I've when a bank is looking to finance it, they want to make sure that you have insurance set up at a value of a replacement cost. What's it going to how much? How much are you going to need to cover the full replacement cost of light cane quality, but new, because you may not be able to buy used equipment to outfit your practice. And you're going to need to buy a new beat, or you're going to need to buy all new ADA chairs. And the pre dental equipment depreciates quickly, but we want to always there's usually a big difference there. You know, wait a second, I'm looking at this practice. This is what the assets are why? Why is the? Why is this at a million dollars of coverage. And it's, it's because we need to figure out what's going to take to rebuild the interior, the space cover tenant improvements and battery. As well as all the light kind quality new. So big property levels. But I'm not always as as concerned about the property levels, because that's a set amount. You know, if there's a fire to your practice, you know, what your what's at stake. Sometimes what's a little bit more concerning is the the liability and that's a potential long term larger loss is is a is the liability concerns. And so we are looking at a lot of different liability coverages for a practice that are all specialized.
Phil Cole 21:27
So, I mean, what should sellers and buyers need to understand them about insurance coverage in general when they're going through a transition period?
Yeah. I think for sellers to start with the sellers, I think sometimes sellers are trying to make sure their books look really good in terms of not having any fat in expense. But a buyer is not going to appreciate it if you've skimped on certain coverages. Or if you aren't, they all sudden have to purchase additional coverages that weren't in there, the profitability of the practice is going to look different. So I think it's important for sellers to review their coverages well ahead of time before they're before they're ready to sell. To make sure that they've got everything in place to one secure that investment, you don't want to be having an uninsured loss or an under insured loss in the 11th hour of your practice. So don't, don't assume that I'm not gonna invest in these coverages now, because I'm not going to need them, I'm just going to sell the practice. So you definitely want to make sure to address those. I think that a misconception is that you can just transfer I'm buying this practice, I'll just inherit all the courage to the hair the seller has, and just rename everything to whatever my practice name is in insurance coverages. In the business insurance space, they don't, they don't transition like that. Most of the time, there's a clause within the policies, when there's an ownership change, it requires it to be re underwritten because the owner is an important part of the success of that business. And so the the insurance company wants to make sure they have a full understanding of who's going to manage and run this practice. So so they do need to be reissued and rewritten. Even if you stay with the same companies, the same agencies, you need to, to to take advantage of that. For Buyers, I think the important thing to kind of look at is giving yourself enough time before you get to the closing date to get those coverages in place. You're not going to be as familiar with that practice. There's going to be some underwriting information it's going to take time to get through. Amen. Don't short your change yourself on applying for for life and disability. Unfortunately, I've seen some deals that haven't been able to go through because there wasn't enough time to navigate maybe some health conditions that applicant wasn't even aware of, that they became aware of as they went through the process for life or disability coverage. So making sure you get give yourself enough time on those coverages.
Chris Webb 24:13
But what kind of coverage what kind of coverage is necessary for a buyer? So you're talking about, you know, making sure you're giving yourself ample time. The thing I don't like and I've never gotten that from you, but I don't like when you talk to an insurance agent and they basically just tried to scare you to death into signing up for every insurance out there. So you know, yeah, what is what is necessary? And then outside of that necessary What do you strongly urge because you've actually seen things not like, you know, a doctor walks out in the street and the bus runs them over. But like what have you seen where doctors have actually needed the insurance and have been grateful that they had it?
Yep. You know, I think certainly life disability business overhead coverage. Yes, those are all things that doctors that have had those types of losses or practices that have had those types of losses to their doctors are incredibly grateful they have because it, it was the difference between the practice succeeding or not, or being able to kind of weather that storm or not. And those ones are tough, because sometimes they're very expensive. That's a big investment that you're making there. And I think something that sometimes is missed is the fact that it without it without the doctor, the practice, essentially, seat ceases to run. They're the breadwinner for the practice, they're the ones generating the revenue. And so without them, the engine stops turning. And so the hygiene program slows down and everything else. I mean, there's just, there's just nothing there. So I think getting those disability and business overhead coverages specifically in place are really core components. The way that insurances are very heavy, become very specific. And it's because they've evolved over time. And so they get very specific. And sometimes there's a lot of exclusions that you see in there. And sometimes those exclusions are what we call in the industry coordination exclusions. And so there's another policy that's better, that's better suited to ensure that so we're not going to insure it under, let's say, flood policy, flood coverage isn't insured under your business owners coverage, because a flood policy, standalone flood is a better product, you'd be able to insure that. And so that is I totally get where you're coming from Chris, where you see like cat, they just keep recommending stuff and telling me, I joke with my wife that I'm the dark cloud that comes in because I'm thinking all these great things happening. And it's my job to tell, tell a practice or a practice manager, you know, have you thought I know it's sunny now, but have you seen that big storm out there. And so I really try to measure that. But it's challenging to to talk about hypothetical things without talking about the worst case scenarios that can happen. Most of our team we've gotten good at is setting up, here's the things that are going to be required to get you to the closing table to satisfy your landlord legally for the state requirements, and the bank. And these are the things that you absolutely need to have in place. And these are some recommended additions that you should consider and whether you're ready to make that you want to make those investments now and invest in those coverages now, or whether that's something that you want to look at to, you know, in the coming years. That's typically how we how we introduce things. Typically, what I what I look to, for from a financing standpoint, they're usually the strictest answers of what coverages are needed. They business owners policy ensures your property general liability, they'll want to see malpractice. You need to have work comp for the state, depending on what state you're practicing, and workers compensation coverage. And then some sort of individual protection to protect their investment because they're investing in you. So life disability or business overhead policy are, are going to be all requirements that need to be addressed.
Phil Cole 28:10
Now, I do think it's important for everyone to understand know how the disability and the business overhead and stuff like that I know we talk about breakeven points all the time. And I will tell you, most dentists don't know what their breakeven point is. But we get dentists that don't even know what a breakeven point is. And so I think it's so amazing that just just in my in Chris's experience, and in this last year for transitions, we have had probably I would say 40%, maybe not maybe not that high, but 40% That's go 30 to 40% of our dentists that we've sold their practices this year. And it's been because of disability. And it's funny, I maybe I shouldn't say it's funny, but it is a common thing that we hear is I don't need overhead insurance. I don't need disability. I'm I'm only 38 years old, I'm healthy. And I had a doctor once is like I ran Iron Man, you know, I get it. But I've also had a doctor that wanted to put it several years ago that wanted to put his practice for sale, healthy as could be. And we put it up for sale. And within two weeks, he calls me and said you need to you need to sell the practice immediately. And I'm like, well what's happening within two weeks of putting his practice up for sale, he gets some hand tremor that out of the clear blue. We just recently had one that was that the gentleman is only 53 years old, and gets overtop of the patient. And he same thing starts having all these tremors and stuff. No health issues to this day can't fit and neither one of them can figure out what's causing it what's doing. It's just so amazing how many of these examples and this is just me, I bet you if we want to go out and talk to other insurance agents want to go out and talk to other transition people, the stories that we could come up with. And yet, you know, and when this when the ADEA sends out the survey that one out of every two dentists will quit dentistry early or will be done in dentistry because of disability or death. I mean, 50%? I mean, do you guys see that same
issue? Yeah. Yeah, I do. And I don't know if it's fixed. I wasn't aware of 50%. But I, but we have these situations happening every month in our agency, where our practice is kind of forcing this transition. And it's hard dentistry is hard on your body. And I think, but there's a lot of things outside of that, even if the healthiest people, there's, you know, unfortunately, a, here's the dark cloud coming out, you know, there's car accidents, people get injured, mountain biking, they fall out a tree, here hunting, I mean, all sorts of things happen. And you don't want to be living in a bubble, you want to be able to enjoy those things and go out and do those things. And so you just need to protect that. I think that the investment or where the misses is that the disability coverage, you should really have enforced for your family. And that's my philosophies. You need to protect your earnings. So your family can maintain that lifestyle, and then think about coverages that you need to protect that investment in your practice. And when you look at this, you guys would know this much better than I would. But when a practice sits idle, how long does it take before it starts to lose lose value from that goodwill, where if it's been closed for three months, or, you know, six months, versus if it's if it's a transition, where it's an active, very busy practice, there's so many in there trading, and, and business overhead policies can help to bridge the gap there between a, a practice that selling at its absolute top price that it could and, and a practice that maybe has to take a care cut, because it's it doesn't have the patients in the door, they don't have the staffing system, because there's no dentists that's, that's keeping the practice running. So I think it's a, it's a really, really important component for sure.
Chris Webb 32:26
Yeah, you know, unfortunately, we've seen that too many times recently, where the doctor or the doctor had something, you know, some life changing situation happen. And, and because of that, the practice just suffers, and they don't have anything in place or in plan. So
there's a lot of a lot of solo practices that are very successful and do a great job. And, but they're a little bit exposed, if you don't have a partner that's in the practice, you're a little bit of exposed if something happens. So think of other ways that you can transfer that risk. So it's not just all within your practice, maybe disability company can step in, so you can pay out a salary for a temp doctor to to cover and keep the patient volume going while you either recover from an illness or have time to sell at its peak. So that's where a business overhead policy can really help bridge the gap. And they're, they're a cheaper alternative to a full blown disability policy. So definitely strong consideration there. You know, I think the other the only last piece I would say, from an insurance standpoint, where people maybe miss out on on better coverage opportunities is, is selecting a malpractice carrier. And I just think it's so important, it's the carrier that's going to stand by you and defend your reputation professional reputation. It's definitely not something that you you want to skip on. You want to be considerate and making sure that you're getting a competitive offer. But it's not generally something that you want to you want to choose the carrier that you feel is going to be well positioned to help you whether any kind of patient or patient safety risk management situations that arise if not the same as like an auto insurance carrier This is somebody that needs to be very specialized have specialized defense know know your industry well to be able to defend you. So I'm a big fan of focused carriers that are only doing malpractice
Phil Cole 34:34
well now's I want to thank you for giving us a ton of information and being the black cloud on this this podcast but no, I think that you know, just to kind of recap what we've what we discussed. I mean, more than anything to me. I think it's very important that people see the importance of of getting have the right coverage. But once again, I can't stress it enough with dealing with you, or someone like you that is dental specific, because just listening to you and those who are listening to this podcast, I hope you can see that when you have an insurance agent that knows what an autoclave is, that knows what assistance arms are and stuff like that. They know how to take that insurance plan then and put it in the best possible light for you in your practice, and I just cannot emphasize that enough. So really, thank you very much Nels for all this good information today.
I appreciate appreciate being part of this and appreciate you guys's partnership. It's been great. So yeah, I think I think you're exactly right Phil, you don't know what you don't know. And so when it comes to knowing how to ensure your practice, you really need to work with someone who knows dentistry as well or Ken knows their way around a dental practice at least so
Phil Cole 35:58
Absolutely. No doubt about it. So thanks again knows if you guys enjoyed our show, please rate review us on Apple Spotify or wherever you get your podcasts. For now then I'm Phil cold with Chris Webb and Nels and we want to thank you for listening