Did You Open Your Umbrella?

Smart Money MD has a column worth reading about buying Umbrella Liability insurance.   He properly states:

Umbrella insurance can essentially be viewed as added protection onto your auto and home insurance.  For instance if your auto insurance covers $250,000 in liability and you lose a suit for $1 million, you may be liable for the difference.  If you aren’t able to pay up, then your creditors can try to go after your savings.  Now there is a semantic argument about how unlikely it is that someone will go after your bank for that much money, but in theory it could happen.

But he then goes on to argue against over insuring, and I have a different viewpoint.  As stated, umbrella liability insurance picks up where your auto and homeowner’s liability coverage ends and extends up to the amount of coverage you purchase.  It is usually sold in increments of million dollars, i.e. you purchase one or two or five million dollars in protection.

This insurance also covers “miscellaneous” liabilities as well.   When President Bill Clinton was sued for sexual harassment by Paula Jones, his umbrella liability policies paid many of the legal costs.  But understand that it does not cover business liability or malpractice.

The insurance is relatively inexpensive.  Expect under three hundred dollars per million dollars coverage per year (my five million dollar policy costs eleven hundred dollars a year).

Every physician’s family (really, every family) should have this coverage.  How much?  You should consider how much you might be sued for-regardless of your exposed assets.  I recommend at least 1-2 million dollars for those with low amounts of risk (single individuals, low mileage drivers) and more for those with higher risks (families with teenage drivers, etc).

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Steven Podnos MD, CFP

Steven Podnos MD CFP attended the University of Florida College of Medicine and trained in Internal Medicine, Pulmonary and Critical Care Medicine at UT Southwestern in Dallas Texas. He moved back to Florida with his physician wife (ENT) and raised a family while practicing Pulm/CC medicine for over twenty years. During that time, he also started and ran a Hospitalist program for several years. In 2002, Steve began a slow transition towards having a Fiduciary Fee Only Financial planning practice-at first just for friends and family. As the practice grew, he transitioned out of full time medical practice to full time financial planning. Dr. Podnos joined the US Air Force Reserve in 2008 as a critical care physician and flight surgeon. He deployed twice to Landstuhl Army Hospital in Germany as an intensivist during the Afghanistan war in 2009 and 2010, and as a critical care air transport (CCATT) physician in Okinawa in July 2018. His firm, Wealth Care LLC now serves approximately 100 physician families nationwide and another fifty non physician families with both financial planning and wealth management. He is a staunch advocate of independent medical practice, believing that the corporatization of medicine and Electronic Medical Records are both harmful to physicians. 

  1 comment for “Did You Open Your Umbrella?

  1. Dave Mittman, PA
    October 23, 2019 at 12:06 pm

    Steve:
    Thanks for the reminder.

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