In today's world it can be important for doctors in practices of all sizes to ensure they are properly protected. What that means can vary depending on individual situations.
1. Malpractice insurance can fall short
Even when covered with malpractice insurance often the maximum coverage falls short. The reason: payments are astronomical. Findings published in The New England Journal of Medicine support this.
The authors reviewing 14 years of malpractice claims learned that “The mean indemnity payment was $274,887.” Most doctors can expect this experience in their career considering that, “It was estimated that by the age of 65 years, 75% of physicians in low-risk specialties had faced a malpractice claim.” This figure is 99% for doctors in high-risk specialties.
These cases are often complex and cause prolonged legal battles that cost enormous amounts, win or lose. An umbrella insurance policy safeguards against this almost inevitable event. When existing coverage is exhausted you will not be left holding the bag. This supplemental policy takes effect and additional liability is shielded.
2. Your current coverage for other insurance lines has limits
Homeowners insurance and automobile insurance have been mainstays of 21st century living. However, many overestimate the protection these policies offer.
Covering damaged property is only the beginning. Traditional policies fund repairs and replacements. This doesn’t account for the greatest possible expense; legal exposure.
This style of coverage protects you from the wider implications of an accident. An umbrella policy is designed to broaden the spectrum of existing homeowner’s and auto insurance policies. In the event of a claim an umbrella policy will take effect once the limits of your original policies have been reached. An umbrella policy has some interesting qualities:
1. Available in increments of $1 million usually up to $5 million.
2. Extends beyond coverage of existing auto and homeowners policies.
3. Coverage premiums range from $150-$300 per year.
4. Minimum amounts must be covered by existing policies to buy an umbrella.
If you’re at fault in an auto accident you may face more than vehicle damage coverage. If someone is injured they may file a personal suit against you. The US government reported that civil suits reached a total of 295,310 filings as recently as 2014. You don’t want to be one of them. The immediate danger is not losing a case, it’s paying to win it.
3. Your current coverage probably doesn’t include bodily injury
Aside from malpractice, the most likely event to cost you legal fees are auto accidents. The numbers prove this. The Insurance Institute for Highway Safety calculated 29,989 fatal vehicle crashes for the latest reported year of 2014. This is a clear risk with so many of our hours per week spent on the road.
In the event of a serious accident one can easily seek damages for even minor injuries. The strongest automobile policy is unlikely to cover enormous healthcare costs. Who will foot the bill? This is a pertinent question as costs are rising each year. The total incurred losses for auto insurance in 2014 reached over $72 million in the U.S. as reported by the Insurance Information Institute. This represents a 12% increase from just four years earlier.
While auto accidents are the greatest statistical likelihood for a claim bodily injury can arise from other factors. People will be happy to file suit when your dog bites them. Ask yourself if you have insurance to cover this today?
Having an open house to sell your home? Imagine an opportunistic visitor falls and seeks damages. An umbrella policy will cover it. Even a next door neighbor can injure themselves on your property. Again, legal costs can be triggered.
4. There’s more to life than just your car and home
An umbrella policy will start where a traditional auto and homeowner’s policy ends, but what about other aspects of life? Imagine a suit built upon slander accusations. Consider a suit citing “shock” or even something as broad as “mental anguish.” Where will your insurance company be in an event like this?
These may seem unlikely. However, people can resort to these claims to apply greater pressure when seeking a payout.
Consider Other Events:
1. A person injures themselves in your pool
2. Your pet bites someone
3. Your child destroys another’s property
4. You crash your car into a home
Even the worst case scenario can be an underestimation. This applies to fire risk. If your home burns the heat can damage close neighboring properties. In extreme cases the fire can spread to another home. Homeowners insurance will cover your loss. However, your neighbor will have legitimate legal grounds to pursue you for damages. Here an umbrella policy is needed.
The simple fact is that we live outside the boundaries of our home and car. In this other aspects of life risk of damages exists and just one suit can bankrupt a family. An umbrella policy offers peace of mind knowing that these other areas of life are covered.
5. Risk extends beyond your own actions
If you’re a homeowner you most likely have children or plan on having them. All parents have experienced the unpredictability of kids. An umbrella policy will safeguard the liability that comes with their sometimes reckless action. If another child is injured (e.g. a broken arm) while playing a baseball game with your child you could be looking at a vindictive neighbor. This will cost you without umbrella coverage.
This works in reverse. That is: sometimes risk finds you. If another neighborhood child ventures on to your property you will become more liable than most understand. If they climb your tree and fall the cost of defending yourself in a suit will be expensive no matter what the outcome. Again, this is where the difference of an umbrella policy can be enormous.
6. You can save money with more protection
Many insurers will offer valuable discounts on the cost of extra coverage. This usually applies to those seeking an umbrella policy with the same insurer covering the underlying, original auto and homeowners policies.
Additionally, explore the option of an “endorsement” or “add-on coverage” to existing policies. This option offered by some insurers can increase your total coverage into the millions. For complicated policies like these it is worth your time to work with a professional. An agent can help guide you through the cost analysis of differing packages.
LeverageRx is an online financial help desk for physicians, dentists and other medical professionals looking for personal financial and legal assistance. The platform offers unbiased reviews and comparisons of products and services relevant to medical professionals including financial advisors, insurance agents, loan officers, physician mortgage loans, contract review services, disability insurance, student loan refinancing and relocation services. To ask a financial question and get qualified advice from experts across the country, visit LeverageRx.