Most DPC practices carry malpractice, general liability and cyber coverage, plus workers' comp once they have employees. Budget for each one as a monthly cost, even when you pay it once a year. Your insurance broker decides what coverage you need. Your books should show what it costs.
The policies most practices carry
- Malpractice, also called professional liability. It covers claims about the care you give.
- General liability. It covers things like a patient slipping in your waiting room.
- Cyber. It covers data breaches and the cost of responding to one. Patient records make this worth asking about.
- Workers' comp. Once you have employees, most states require it. The premium usually depends on your payroll.
- Property coverage for your equipment and buildout, often bundled with general liability.
Which policies you need and how much coverage to buy is a question for your insurance broker, and sometimes your attorney or your lease. Your landlord may require a certain amount of liability coverage.
Budget for it monthly
Insurance is easy to forget because many policies bill once or twice a year. Then a large bill lands in a month you didn't plan for.
In a made-up example, malpractice costs $6,000 a year, general liability $1,200 and cyber $1,500. That's $8,700 a year, or $725 a month. If you move $725 into savings each month, the renewal never surprises you. Add workers' comp once you know the premium from your payroll.
How it shows up in your books
I'd give insurance its own expense account, with a sub-account for each policy. Then you can see each premium on the P&L and compare it at renewal.
When you pay a full year up front, the books can either show the whole bill as an expense that month or spread it across the 12 months it covers. Spreading it gives you a truer monthly profit. This post explains how prepaid expenses work.
If you pay monthly through a financing company, the payments go against a liability, and the finance charge is its own expense.
Workers' comp audits
Workers' comp premiums are often based on an estimate of your payroll. At the end of the policy year, the insurer may audit your actual payroll and send a bill or a refund. Clean payroll records make that audit quick. Keep your payroll reports where your bookkeeper can find them.
What I'd do this week
- List every policy you carry, its annual cost and its renewal date.
- Add up the annual total and divide by 12. That's your monthly set-aside.
- Send copies of the policies or invoices to your bookkeeper.
- Ask your broker before each renewal whether your coverage still fits the practice.
Common questions
Do I need cyber insurance as a small practice?
It depends on your risk and your contracts. Patient data makes it worth asking your broker about before you decide.
Is insurance a business expense?
Practice insurance generally is. Your own life or disability coverage may be treated differently. Ask your CPA how to handle each policy.
Should I pay annually or monthly?
Annual payments sometimes cost less. If paying the full year would drop your cash below your floor, monthly payments can be worth the small extra cost.
Want every policy on its own line?
We reconcile every account every month and send your P&L and Balance Sheet by the 15th, so decisions like this start from real numbers. If that's what you need, apply to work with us.