BDA Indemnity now protects limited companies

16 May 2022
3 min read

The British Dental Association (BDA) has launched insurance cover for entities, protecting limited companies and other types of legal entities with the same comprehensive cover as their personal indemnity policyholders.

The BDA estimates around 60 per cent of dentists run their businesses as entities for the purpose of carrying out dental work, which may create tax efficiencies, but it also creates an unfortunate loophole in indemnity cover.

If a lawyer makes a claim against an entity, most indemnity providers will not cover it, as the claim is not against the named member or policyholder. This results in the claim and associated costs needing to be paid by the company and ultimately the dentist(s) and other shareholders.

Head of BDA Indemnity, Len D’Cruz, said, "If you run your dental business as a limited company or entity you can face claims of vicarious liability either individually or jointly with others. A patient’s claim could cite the treating dentist or the name of a limited company, and increasingly it is the latter.

"If you are a member and already hold an indemnity policy with us, we can add the cover as an endorsement or extension of your policy. This will endorse your policy for your name, as well as your limited company. We can also cover you retrospectively back to the start date when your personal cover started, in the event a past claim is bought against your entity.

"It’s worrying how few people in the industry understand these risks. Indemnity providers have told dentists in these cases to request claims are bought against them personally, when the entity has been sued. However, if a dentist cannot persuade the lawyer to do this and the entity is pursued, this leaves the practice owner on their own to bail themselves out, out of their own pocket or by drawing upon the company’s assets without any third-party support or contribution from an indemnity provider."

The BDA believes entity cover can protect you in the event that you come up against these financial and legal risks. Like their professional indemnity cover, the newly launched bolt-on is occurrence-based and contractually certain.

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Facts about the product:

It is only available to limited companies which are wholly or partly owned by one or more BDA Indemnity policyholder(s). Those BDA Indemnity Policyholders must collectively own 50 per cent or more of the company. Only individual registered dentists who are in an appropriate tier of membership can apply for and hold a BDA Indemnity policy.  
It’s still legally binding and occurrence-based. Although many organisations choose to offer entity cover only on a ‘claims-made’ basis, or on a discretionary basis (or worse still, a discretionary claims-made basis), BDA Indemnity was set up with the deliberate intention of avoiding the many gaps that can arise in relation to claims made cover. Reflecting that, and the fact that a practice owned by a Limited Company might face additional vulnerability because of these gaps, we have taken care to ensure that both individuals and entities can enjoy the added protection of occurrence-based, contractual indemnity insurance. 
This is particularly valuable in the case of claims which relate to treatment which was provided by dentists who no longer work at the practice, perhaps having left many years ago.  Occurrence-based indemnity provides cover in perpetuity, irrespective of how many years later a claim is brought and without the need to buy any additional (‘run off’) cover. 
The policy wording and scope of cover is exactly the same as for any individual dentist. So it includes a vicarious liability extension, cover for registered dental nurses employed by the entity, legal costs cover for a wide range of challenges and investigations arising from the practice of dentistry (e.g CQC, Information Commissioner, Advertising Standards Authority, Health & Safety Executive etc), and crisis management cover to provide advice and representation in mitigating any potential reputational damage to the entity from adverse media (or social media) attention resulting from a claim covered by the policy. 
The policy is arranged by the British Dental Association and underwritten by Royal & Sun Alliance Insurance Ltd. The British Dental Association is an appointed representative of Lloyd & Whyte Ltd. Lloyd & Whyte Ltd is authorised and regulated by the Financial Conduct Authority (FCA).