When preparing to sell a dental clinic, most owners focus on the obvious elements — financial performance, lease terms, patient retention, and operational handover. Yet one area is frequently overlooked, and the consequences of ignoring it can be significant: insurance and professional indemnity coverage.
At Sinosmart Business Brokers, we work closely with dental practice owners not only to achieve a successful and profitable sale, but also to ensure they are fully protected during and after the transition. Understanding your insurance obligations is essential to safeguarding yourself long after settlement.
1. Claims-Made Cover Doesn’t End at Settlement
Most dental indemnity policies are written on a claims-made basis. This means coverage applies not at the time the treatment was performed, but at the time a claim is made — which could be months or even years after you’ve sold your clinic.
If a seller cancels their policy immediately after settlement, they may unintentionally leave themselves exposed to future claims relating to past patients. This is one of the most common — and costly — oversights we see.
2. Run-Off Cover May Be Necessary
To protect against claims arising from treatments provided before the sale, many dental professionals will need run-off cover, which continues to insure them for past work even after they stop practising.
Alternatively, the buyer may assume responsibility for historical liability, but this must be clearly defined in the sale agreement. This is especially important for dentists who are retiring or permanently leaving the profession.
3. Sale Agreements Must Clearly Define Liability
A well-drafted sale contract should state exactly who bears responsibility for any claims that originate from pre-settlement treatments. Without explicit terms, sellers may remain liable far longer than expected — creating legal and financial risks that could have been avoided with proper planning.
4. Buyer Due Diligence Includes Insurance Records
Buyers performing due diligence often request:
- your claims history,
- details of your current indemnity policy, and
- disclosures of any known risks or incidents.
Providing this information upfront builds trust, strengthens negotiation, and accelerates the transaction process.
Real Insight
A seller we worked with had no run-off cover and assumed the buyer’s new policy would protect them. When a patient filed a complaint 18 months later, the seller was personally liable — and uninsured. With proper planning, this could have been avoided.
Insurance and indemnity planning is not just an administrative formality — it is a critical part of a safe and successful dental practice sale. Whether you plan to retire, relocate, or transition into another role, understanding your obligations ensures your exit is both financially and legally secure.
