Result Driven Impact

Medical/Dental Business Interruption

Background

Mountainview Dental Associates, a dental practice structured as a professional corporation, provides comprehensive dental services in a community located within a hurricane-prone region. With approximately $3.5 million in annual revenue, the practice is managed by two owners and employs a team of 12 dedicated professionals. Acknowledging the risks posed by severe weather events, the practice proactively implemented an 831(b) Plan to protect against potential business interruptions and financial losses arising from disasters and utility disruptions

  • INDUSTRY- Healthcare
  • SPECIFIC- Dental Services
  • ANNUAL GROSS REVENUE- Approx. $3.5 Million
  • EMPLOYES- 12
  • OWNER STRUCTURE- Professional Corp. with 2 Owners
dentist

Risk Description

Mountainview Dental Associates faced significant business interruption risk due to its geographical vulnerability to hurricanes, which could result in extended utility outages and severely impact operational capabilities. Traditional insurance often inadequately covers the comprehensive revenue losses and operational disruptions following such widespread disasters, leaving practices financially exposed.

Incident

Mountainview Dental Associates experienced substantial disruption when a major hurricane led to prolonged utility outages, including the loss of power, water, Wi-Fi, and telephone services. Essential utilities remained unavailable for five consecutive days, necessitating external sourcing of potable water. The practice was situated in a federally declared disaster area, where widespread infrastructure damage significantly reduced patient visits and diminished revenue.

Initially, direct revenue losses were estimated at approximately $58,000, based on prior average daily revenues of $11,500. Further analysis revealed an extended period of diminished patient visits, contributing an additional estimated loss of $18,000. Upon final review, the total financial impact was calculated to exceed $85,000.

Resolution

The practice promptly filed a claim under the specialized Business Interruption policy within their 831(b) Plan, tailored specifically to cover losses resulting from disruptions in essential utilities and operational continuity. The direct writer swiftly validated the claim, which included documentation of average daily revenues, disruption duration, and ongoing revenue impacts.

With a policy limit of $70,000, the plan substantially mitigated the financial consequences of the hurricane event. This immediate financial support significantly eased the practice’s financial burden, allowing operational recovery and continuity of patient care during and after the disaster.

Key Takeaways

Utilizing their 831(b) Plan enabled Mountainview Dental Associates to effectively manage and substantially mitigate financial disruptions caused by severe weather events. This case highlights the necessity of specialized business interruption coverage to address risks inadequately covered by traditional insurance policies.

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