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Umbrella insurance covers you broadly by picking up where your other policies stop. Sometimes referred to as personal liability insurance or excess liability, umbrella insurance does not stand alone. Rather, it supplements other policies such as auto or homeowner’s insurance, helping cover any resulting liability that exceeds your coverage limits on these standard policies. For example, if you need to use your homeowner’s insurance or your vehicle insurance to cover a loss or claim against your property, and that policy only covers a portion of the expense, your umbrella policy can cover the difference.
As a physician, you experience risk differently than most professionals. You’re most likely to already have insurance against several of the most common financial pitfalls with a combination of:
However, unlike your non-physician counterparts, you carry the additional risk of being a target with deep pockets. This can bring an added element of uncertainty, and it makes it difficult to cover all your bases. Accordingly, umbrella liability insurance should be part of your risk management toolkit.
Aside from providing extended coverage, another advantage of umbrella coverage is that you and the insurance company’s interests are completely aligned. They don’t want to pay a benefit any more than you want to be sued. Because insurance companies don’t want to pay claims, you have essentially hired their team of attorneys to work towards your mutual best interest. Avoiding a large claim is their specialty.
The average umbrella policy will usually cover the following:
Since umbrella insurance is intended as non-occupation-related liability coverage, it won’t include things like:
Insurance companies will only allow you to purchase umbrella liability coverage if you already carry auto, homeowners, or another form of insurance. It is supplemental coverage, not primary coverage. You also typically must meet certain coverage limit minimums before you can add umbrella insurance.
As a rule of thumb, you should have coverage equal to the amount of assets you own. In other words, cover your assets. Another rule of thumb is to have coverage in excess of any possible judgment against you, and as a physician, that may be a larger number than you think.
Most of the physicians we work with start with a policy of $1 or $2 million, but as their net worth grows, it’s not unusual to see policies of $5 million or more. Some of this is asset related, but other times, it’s lifestyle related. A physician with several teenagers behind the wheel, or multiple recreational vehicles, or perhaps a boat, may be exposed to more risk than a physician that doesn’t have that same risk profile. It really matters what risks you are willing to take in life and how much protection you need.
The good news about umbrella insurance is that it is typically very inexpensive in relation to other coverage, and you can get quite a lot for a modest premium. Again, depending on your personal risk profile, policies can be as low as $200 – $300 per year for $1 million in coverage – but, tack on a boat, RV, or a driving teenager… and that premium can be a lot more.
Umbrella policy insurers will often give you a discount if you bundle multiple policies together. Auto, homeowner, plus liability will get a discount. But that same insurer will likely only let you purchase an umbrella insurance policy if you have a minimum level of liability coverage on those same policies, which may involve a larger premium on the underlying auto or homeowners insurance.
To determine if umbrella insurance is right for you, start by taking an inventory, assess your risk profile, and evaluate your options:
Looking for help navigating through umbrella insurance? Talk to our team of experts. We can help you with finding the right umbrella insurance policy today.
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