Disclosures: Mandell and O’Dell report no relevant financial information.
Few need asset protection as much as physicians. As high-income earners, physicians often have substantial financial assets and real estate that must be protected from risk of loss due to liability, malpractice claims, worker complaints, cyberattacks, breaches HIPAA, etc.
To protect themselves, physicians should consider P&C insurance as an effective first line of defense.
P&C insurance defines a variety of coverages that protect financial assets and real estate. One type of insurance that falls under the P&C banner, and that no physician should be without, is medical malpractice. There are three main types of medical malpractice policies that physicians should consider:
- A claims-based policy only provides coverage if the policy is in force both at the time of processing and at the time a legal action is brought.
- An insurance policy will cover any claim for any event that occurs during the period of coverage, even if the claim itself is filed after the policy expires.
- Tail cover provides a period of cover that extends for a set amount of time after the policy ends.
Within these options, physicians must make careful decisions about the design of their policy. For example, when it comes to choosing on-demand policies, doctors need to be sure that they will have additional coverage if they change insurers. Before choosing limits, physicians should consider what might be a reasonable claim experience in their specialty. Additionally, they need to decide which deductibles are appropriate for their risk and budget. For example, a high deductible policy may be more affordable on an annual basis, but when they have a claim and realize that their coverage requires payment of a substantial deductible, it may go against the objective of low-cost premiums.
Another type of insurance that offers broader protections is a Business Owner’s Policy (BOP). Some of the coverage options doctors might need a BOP for include:
- accidents on the premises (civil liability);
- breach of the fiduciary duty of physicians acting as trustees of a qualifying pension plan;
- billing issues, including overcharging and incorrect billing;
- HIPAA issues;
- business continuity/discontinuation;
- employee issues, including allegations of sexual harassment or hostile work environment, wrongful termination and workers’ compensation;
- violation of anti-bribery rules; and
- cybersecurity for damages due to data breach, inability to access the system and ransomware.
Physicians may also need to consider commercial rental or homeowners insurance, depending on the space in which their practice operates.
Personal property and casualty protection
The risks of loss do not come only from the work of a doctor. Their homes, cars, boats and other personal real estate can all face damage and liability issues. Once again, property and casualty insurance is there to help doctors protect their homes and cars.
David B. Mandell
Jason M. O’Dell
A home insurance policy not only protects the structure of the house against damage caused by incidents like fires, vandalism and hurricanes; it also protects interior possessions such as art, antiques, jewelry, and other collectibles. Additionally, this coverage can protect doctors from liability claims when a guest at home is injured. Reasonable policy limits and deductibles will depend on both the cash available to the insured, the value of the property and its contents and the potential cost of liability claims. It will also depend on the type of cover chosen. A policy that provides replacement costs may have different costs than one that provides a market value.
Car insurance considerations go far beyond the value of the vehicle a doctor drives. Policyholders must also consider the potential for property damage to another person in the event of an accident and the potential for bodily injury if found guilty. In addition, physicians must consider the risks of having an accident with an uninsured motorist.
Umbrella insurance is one of the most important types of personal insurance. Umbrella policies are relatively inexpensive and cover claims that exceed the limits of other policies. Whether it’s an extra $5, 10, or $20 million to protect against liability claims stemming from dog bites, swimming pool accidents, or domestic staff injuries, umbrella policies extend protection significantly. very affordable.
Choose the experience
Physicians have unique insurance needs and need to work with advisors who fully understand them. A physician’s insurance advisor should be familiar with the risks of owning and operating a medical practice and be skilled in helping physicians design policies with comfortable deductibles and generous but reasonable limits. Ideally, advisors should also help doctors manage the costs of their coverage so they can get all the protection they need, affordably.
Wealth planning for the modern physician and Wealth management made easy are available for free in print or as an e-book download by texting HEALIO at 844-418-1212 or at www.ojmbookstore.com. Enter code HEALIO at checkout.
David B. Mandell, JD, MBA, is a lawyer and founder of the wealth management company OJM Group www.ojmgroup.com, where Jason M. O’Dell, MS, CWM, is the managing partner and financial advisor. You should seek professional tax and legal advice before implementing any strategy described here. Mandell and O’Dell can be reached at [email protected] or 877-656-4362.