Umbrella insurance is “non-occupation” liability. Occupation-liability (in our case) would be your malpractice insurance.
I didn’t really discuss Umbrella Insurance as a necessity because for most residents and young attendings it isn’t really necessary yet as it falls into more of the “asset protection” category. Until you have assets to protect (such as a house) then you really don’t need this. However:
You want your non-occupation liability insurance to be approximately equal to the assets you own.
When you own a car or a house you have a certain liability. Car accidents happen and injuries at your home can also happen. In general, most people don’t worry about these sort of things because they are relatively rare. However, once a lawyer is involved, all it takes is a quick google search of your name as Dr. Smith and the wolves come out. All of the sudden, you are being sued for $2 million dollars in a small fender-bender because you’re a doctor. It’s the sad reality of the litigious society with live in.
So then, how do I get umbrella insurance?
Umbrella insurance is basically insurance “above the normal” coverage provided by car insurance and home-owner’s insurance, hence the term “umbrella”. Before you can buy umbrella insurance you will need to raise your current car and home-owner’s insurance to a certain level. Currently, this level is $300,000 I believe.
How much umbrella insurance do I need?
Umbrella insurance is kind of like term life insurance, it gets progressively cheaper as you buy more coverage. Depending on your own assets, $1 million may be ok for some doctors, however, I would think that for most doctors $2 million is probably the better, safer bet. If you are a large amount of assets (multiple houses, cars, boats, plane) then going up to a $5 million policy would be the next step.
Does this really help me?
Yes. Like I said, insurance for doctors is all about risk avoidance. If you don’t ever have to use your umbrella insurance, great. But you will sleep much better knowing it’s there. You do not want to have to worry about having to get a lawyer to represent you in a fender bender where you are being sued for $2 million dollars… for no other reason except that you are a doctor. Your umbrella insurance company will not definitely not want to pay out either, but they also have an army of attorneys who know how to handle these cases.
How much will it cost?
This is variable depending on you. If you have other vehicles like ATVs or Jet Skis that are prone to accidents, or if you have a house with a trampoline, pool, or 10 vicious dogs then your premium will go up. However, I think a reasonable ballpark estimate would be $50 a month ($600/year) for $2 million coverage. (2/24/2016)
Is it worth it?
This is a risk/benefit thing. If you are fresh out of residency and have $300,000 debt to your name and just started your first job, you probably don’t need it… yet. However, fast-forward a few years when you have a house in your name and some money in the bank and then you will understand the necessity of umbrella insurance.
Does umbrella insurance also include coverage above what my malpractice insurance covers?
Sadly no. However, if it did, it would be vastly more expensive.
Although scary, it is not very often that a physician would be sued for more than his/her malpractice insurance can pay. It would most likely be thrown out. The huge settlements you see in the new regarding malpractice lawsuits are usually a combination of the hospital, multiple doctors, and potentially other ancillary staff.
Umbrella insurance is necessary when you have assets to protect.
Raise car/home-owner’s insurance to $300,000 then get an additional $1 – 2 million umbrella coverage. ($5 million if you have a lot of assets)
You want the army of attorneys on your side in the event of a non-occupational liability event.
Umbrella insurance does not include coverage above your malpractice insurance.
Agree? Disagree? Questions, Comments and Suggestions are welcome.
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