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A Crisis Situation

The pandemic upended how veterinary care is provided. Make sure your business is adequately protected.

A Crisis Situation
It’s critically important that you discuss your risk exposures with a knowledgeable insurance agent and adjust your risk-management portfolio accordingly.

COVID-19, the little virus responsible for so much tragedy, changed our collective future in a few short months. We are at a crossroads today. On one hand, we mourn the unprecedented loss. On the other, we rejoice in an incredible scientific achievement: Modern science and technology delivered multiple highly effective vaccines within a time frame previously thought impossible.

Against this backdrop, the veterinary profession is extremely fortunate. The pandemic’s economic impact has been nominal compared with the financial devastation endured by many industries. The essential nature of our business along with a marked increase in pet ownership has led to many practices experiencing year-over-year financial growth. However, to this end, practice owners had to use several unconventional and often less-efficient service delivery models to protect their teams, clients and themselves.

Nonetheless, I think we can agree that our profession will never completely return to the old way of doing business. Concierge service, at-home veterinary care and telehealth platforms are just a few of the expanding modes of medicine that many pet owners embraced during the pandemic and will continue to demand.

What does all this mean for a veterinary practice’s insurance and risk management requirements? Let’s look at some of the major exposures you should review with your insurance agent.

Workers’ Compensation

This form of no-fault insurance was developed to provide medical care and wage replacement to employees who are injured or become ill while on the job. In addition, injured employees might be eligible for temporary or permanent disability benefits and vocational rehabilitation. If the worker dies, his or her survivors might collect death benefits. In exchange, the employee surrenders the right to bring legal action for negligence against the employer.

Historically, virtually all workers’ compensation policies excluded coverage for bacterial and viral infections contracted at work, such as the flu and, now, COVID-19. Responding to the pandemic, several states enacted legislation addressing the exclusion, requiring insurers to cover employee COVID-19 claims. Some laws include a presumption of risk stating that employees who tested positive for COVID-19 are considered to have contracted the virus at work unless the claim is unequivocally disproven. In addition, some states enacted additional claims reporting and management protocols for businesses where one or more employees tested positive.

I see a good chance that some components of these additional coverage requirements will remain after the pandemic phase subsides. We might find federal or state legislation requiring insurers to cover future bacterial or viral outbreaks under certain circumstances. Likewise, insurers will seek to mitigate the financial risk through the pricing of policies.

Check with your insurance agent for guidance on the status of workers’ compensation coverage in your state.

Animal Bailee

This coverage protects a business when an animal in its care, custody or control is injured or killed. The most frequent claims involving mobile practitioners arise from animals escaping or being hurt during transport to the veterinarian’s vehicle or to a brick-and-mortar clinic for additional treatment. When discussing the coverage with your insurance agent, pay special attention to deductibles and coverage limitations.

Professional Liability and License Defense

The delivery of telemedicine, teletriage, teleconsulting and telemonitoring services is becoming a popular option for pet owners. Unfortunately, standardized regulations are lacking. Work with your insurance agent to ensure that your professional liability and license defense policies will respond to claims about telehealth services.

Hired and Non-Owned Auto

Using a personal or rented vehicle during business activities can pose significant liability on the business if bodily injury or property damage occurs to a third party during an at-fault accident. With the expansion of at-home and concierge veterinary services, the use of business and personal vehicles will continue to increase.

If you drive a personal or rented vehicle on company business, confirm that you have hired and non-owned auto coverage as part of your overall business liability policy, and be sure that the financial limits are adequate.

Employment Practices Liability

Employment Practices Liability insurance (EPL) protects against employee claims alleging discrimination, wrongful termination, harassment and other employment issues. Additionally, EPL policies might cover third-party claims by clients or independent contractors and defend against allegations of wage and hour violations.

The multitude of changes in worker expectations and job responsibilities that accompanied the pandemic has led to a significant increase in personnel issues and employment lawsuits. Insurance companies anticipate the trend to continue well after the pandemic subsides.

The number of employment lawsuits in some states has reached such a level that some insurance companies either significantly reduced coverage, increased prices or deductibles, or simply exited the EPL insurance market. California is a prime example of where several major EPL providers stopped renewing policies or accepting new business. Be sure to inquire about the opportunity to procure an EPL policy if you do not have one or about potential changes to your policy.

Cyber Liability and Network Security

A marked increase in cyberattacks against individuals and businesses is another sad reality associated with the pandemic. Along with the growing dependence on global safekeeping of sensitive data, the boundaries of network and cyberliability exposure for veterinary practices has expanded. More than ever, practices are looking to outside vendors for data storage services.

Consider this:

  • Outsourcing administrative and financial responsibilities do not eliminate your liability should a data breach occur.
  • Federal and state laws dictate that the data owner, not the vendor, is ultimately responsible for the protection of sensitive data.
  • Almost half of all breaches take place during the transmission of sensitive data or while in the possession of a third-party vendor.
  • Most cyberattacks are committed against small businesses.

If your veterinary hospital transmits proprietary information about credit cards, payroll, employee benefits or patients, you can rest assured you have significant cyberexposure. Furthermore, the exposure has risen exponentially since the outset of COVID-19 as the use of cash and paper documents became almost nonexistent. Virtually all personal and business financial transactions are now conducted electronically.

Understand that the veterinary profession can expect more changes in insurance coverage, prices and availability as federal and state laws and regulations are enacted in light of the pandemic. It’s critically important that you discuss your risk exposures with a knowledgeable insurance agent and adjust your risk-management portfolio accordingly.

Protect & Defend columnist Dr. Ed Branam is the veterinary and animal services program manager at Safehold Special Risk Inc. A 1977 graduate of the Michigan State University College of Veterinary Medicine, he has worked in the insurance industry for the past 20 years. He is a former Sacramento, California, veterinarian and a former veterinary affairs manager with Hill’s Pet Nutrition.

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