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Do I need entity coverage for my limited liability corporation or partnership?

Regardless of the form of the business organization, physicians would be well advised to maintain adequate professional and general liability insurance.  A limited liability corporation or partnership is not a substitute for insurance. Entities can be, and frequently are, named in suits. Even though the entity may ultimately be dismissed from a claim, legal expenses can be costly. 

In addition, entity coverage offers protection to corporations and partnerships and to their members for their vicarious liability exposure arising from services rendered by other members of the practice.  Entity coverage also protects the entity’s non-physician employees for their direct liability exposure.  For example, if a physician, her two partners, their business entity, and the entity’s employed technician are all named in a lawsuit based on the physician’s and technician’s actions, the entity coverage would provide vicarious liability coverage to the entity, direct liability coverage to the employed technician, and coverage to the partners for any liability they incur due to their status as partners in the business.  (The physician’s direct liability would be covered under her individual coverage.)

Entity coverage also covers members of the entity for their professional committee activities, such as credentialing, accreditation, and quality assurance performed for the entity.

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