Insurance and Risk Management
Do You Have Full Home and Auto Coverage? (Trick Question.)
Posted on March 24, 2020
Did you know you can carry the highest coverage levels on your home or auto insurance policy and still not have “full” coverage if you’re hit with a major lawsuit? Physicians can be especially vulnerable to legal fallout from accidents that might not pose the same financial risk to people in other professions.
Most people who get into car collisions typically exchange insurance details and let the two carriers sort it out. But when injured people find out a driver is a doctor, they may be more likely to file a claim because they’re aware that doctors make a good living. That puts you at risk for losing personal assets which may include your:
- Home, cars and valuables
- Current earnings
- Future earnings (yes, these can be garnished)
Umbrella coverage is a surprisingly affordable add-on to your current home and auto policies that helps you safeguard your financial health in the event of a lawsuit. This “insurance for your insurance” kicks in when your other policies reach their financial limits.
With an umbrella, you can be prepared for unfortunate situations that won’t be fully covered by your home or auto policies. Real-life examples include:
- You hit a driver in her 30s who sues you for emotional distress, as well as lost wages. If her injuries deprive her of earning $50,000 a year, you might have to pay $2M+ in lost wages and $1-$5M in “potential loss.”
- You host a paintball party in your backyard for your kids and their friends. Even though you advise them of proper safety precautions, one participant removes her headgear while leaving the game and is struck in the eye with a paintball. Between the cost of a lawsuit and medical bills, you could pay upwards of $475k.
- You own a rental property, and a tenant claims she became ill from black mold found in her apartment. Because she suffered permanent lung damage, she lost her track scholarship to a four-year college. She sues you for over $750,000.
In these unfortunate situations, an umbrella policy can make all the difference in helping you maintain your financial wellbeing. Most policies start at a payout of $1M and go up to $10M. And the good news is, you don’t have to wait until you make your first million to buy an umbrella. You can get one as early as residency and increase your policy limits as you go.
Interested in your options for top-rated umbrella policies … and bundling your home and auto insurance in one place?