Protect personal and business assets with property and casualty insurance
Few have as much need for asset protection as physicians. As high-income earners, physicians often have substantial financial assets and real property that needs to be removed from risks of loss due to liability, malpractice claims, worker complaints, cyberattacks, HIPAA violations and more.
To protect themselves, physicians should look to property and casualty (P&C) insurance coverage as an effective first line of defense.
P&C insurance defines a variety of coverages that protect financial assets and real property. One type of insurance that falls under the P&C banner, and which no physician should be without, is medical malpractice. There are three main types of medical malpractice policies for physicians to consider:
- A claims-made policy only provides coverage if the policy is in effect both when the treatment took place and when a lawsuit is filed.
- An occurrence policy will cover any claim for any event that took place during the period of coverage, even if the claim itself is filed after the policy lapses.
- Tail coverage provides a period of coverage that extends for a set amount of time after the policy ends.
Working within these options, physicians must make careful decisions regarding the design of their policy. For example, when it comes to choosing claims-made policies, physicians need to make sure that they will have tail coverage lined up if they switch insurers. Before choosing limits, physicians need to consider what a reasonable claims experience might be within their specialty. Further, they must decide what deductibles are appropriate to their risk and budget. For example, a high deductible policy might be more affordable on an annual basis, but when they have a claim and realize that their coverage requires payment of a substantial deductible, this may defeat the purpose of the low-cost premiums.
Another type of insurance that offers wider protections is a business owner policy (BOP). Some of the coverage options for which physicians might need a BOP include:
- accidents on premises (personal injury liability);
- violation of fiduciary duty for physicians acting as trustee on a qualified retirement plan;
- billing issues, including overbilling and improper billing;
- HIPAA-related issues;
- business continuation/interruption;
- employee issues, including accusations of sexual harassment or hostile work environment, wrongful termination, and worker’s compensation;
- violation of anti-kickback rules; and
- cybersecurity for damages due to a data breach, being unable to access the system, and ransomware.
Physicians may also need to consider commercial rental or property insurance, depending on the space where their office operates.
Personal P&C protection
Risks of loss don’t just come from a physician’s work. Their homes, cars, boats and other real personal property can all face damages and liability issues. Once again, property and casualty insurance is there to help physicians protect their homes and automobiles.
A home insurance policy doesn’t just protect the home’s structure against damages caused by incidents like fires, vandalism and hurricanes; it also protects interior possessions such as art, antiques, jewelry and other collectibles. Further, this coverage can safeguard doctors from liability claims when a guest in the home is injured. Reasonable limits and deductibles for the policy will depend on both the liquid assets available to the insured, the value of the property and contents, and the potential cost of liability claims. It will also depend on the type of coverage chosen. A policy that provides for replacement costs may have different costs than one that provides market value.
Auto insurance considerations extend much further than the value of the vehicle a physician drives. Insureds must also consider the potential for another person’s property damage should they have an accident and the potential for bodily injury if they are found at fault. In addition, physicians should consider the risks of getting into an accident with an uninsured motorist.
One of the more important types of personal insurance is umbrella coverage. Umbrella policies are relatively inexpensive and cover those claims that exceed the limits of other policies. Whether it is an extra $5, $10 or $20 million to protect against liability claims arising from dog bites, pool accidents or domestic staff injuries, umbrella policies extend protection in a very affordable way.
Physicians have unique insurance needs, and they need to work with advisors who have a thorough understanding of them. A doctor’s insurance advisor should be familiar with the risks of having and running a medical practice and be skilled in helping physicians design policies with comfortable deductibles and generous yet reasonable limits. Ideally, advisors should also help physicians manage the costs of their coverage so they can get all the protection they need, at a price they can afford.
Wealth Planning for the Modern Physician and Wealth Management Made Simple are available free in print or by ebook download by texting HEALIO to 844-418-1212 or at www.ojmbookstore.com. Enter code HEALIO at checkout.
David B. Mandell, JD, MBA, is an attorney and founder of the wealth management firm OJM Group www.ojmgroup.com, where Jason M. O’Dell, MS, CWM, is the managing partner and financial consultant. You should seek professional tax and legal advice before implementing any strategy discussed herein. Mandell and O’Dell can be reached at firstname.lastname@example.org or 877-656-4362.