After opening his chiropractic practice, Dr. David Jones made sure it was covered with the appropriate insurance. Failure to update it cost him dearly.
Posted in Business Insurance on Friday, March 14, 2025
In the early days of Jones Chiropractic, Dr. David Jones had one part-time employee. He secured a business owner’s policy (BOP), which provided $25,000 in Employment Practices Liability Insurance (EPLI) coverage.
His practice thrived over the years, and eventually grew to include three full-time chiropractors, two full-time chiropractic assistants and two part-time administrative assistants. Unfortunately, when he had to let one of the employees go, they sued him for wrongful termination.
Coverage Gap
Dr. Jones called his agent to explain the situation and ask about EPLI coverage, which protects businesses from lawsuits related to discrimination, wrongful termination, harassment, and other employment-related issues.
Although his initial EPLI limit of $25,000 through his business owner’s policy may have been sufficient with one part-time employee, Dr. Jones’ insurance needs had grown with his practice—something he didn’t consider.
Between legal costs and potential damages in the wrongful termination case, the potential loss amounted to over $100,000, leaving at least $75,000 to come from Dr. Jones’ pocket.
What Can We Learn?
- Having a business owner’s policy and not just a general liability policy is important. In this scenario, it provided valuable EPLI coverage, although not enough for the wrongful termination case.
- It’s imperative to periodically check in with your insurance agent to review your policies to ensure your coverage is sufficient.
- If there have been changes in your practice, such as new equipment, hiring staff, or a remodel, call your agent promptly. The change may necessitate additional coverage.
- Some people may delay updating their coverage because they think it will be terribly expensive. In this scenario, Dr. Jones could have had four times the EPLI coverage for minimal additional premium.
- At NCMIC, we know you’re busy. That’s why we make it easy to update your coverage. We reach out to customers prior to renewal to ask about any updates or changes. It’s a great way to make sure your insurance is keeping up with your practice.
The above scenario is not based on a single case. Instead, it’s an example of what can easily happen without adequate insurance coverage, based on claims we’ve encountered.