In a recent interview I did with CBS, I revealed why liability insurance by itself is an inadequate asset protection plan for doctors.
Successful healthcare professionals who are vulnerable to malpractice suits are often under the false impression that a liability insurance policy will protect their assets in all circumstances. However, liability insurance only makes up one part of a robust asset protection plan.
Insurance companies work off a simple profit model, which doesn’t offer enough protection when making a claim.
Insurance companies want to collect as much money as possible through premiums and avoid payouts for claims filed against premiums. This is unfortunately the cold, hard truth that could leave your assets exposed.
Contrary to common belief, umbrella liability insurance plans aren’t a solid enough plan to shield assets either.
Many medical professionals are under the impression that umbrella liability insurance will provide protection no matter what. However, this is not the case.
Insurance companies don’t perceive umbrella liability insurance as asset protection, and neither should you. To them, it’s a plan that only covers specific occurrences, and several exclusions limit the coverage.
A professional’s errors and omissions insurance used in medical malpractice cases is often inadequate, particularly for more substantial claims.
For instance, the family of a patient who died of an unrelated complicated after treatment could sue the doctor for negligence and win in court. However, the chances are that liability insurance won’t protect the professional in this case.
While the average liability policy in the US is worth $1 million, the value of a malpractice verdict is roughly $3.9 million, meaning that a physician who is being sued has to account for the rest of the $2.9 million.
While it’s nearly impossible to account for every eventuality when it comes to a medical malpractice suit, I said that there are ways to have better asset protection.
Physicians and other successful medical professionals should still get a liability insurance plan that fits somewhere within their budget. But they should also make sure to shield their hard-earned assets through setting up an asset protection plan with the proper legal structures.