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  • Umbrella insurance

    Would a large umbrella policy be advisable for insurance against a large lawsuit which went beyond malpractice caps and filed for non-economic damages.  I.E. 5M umbrella policy?

  • #2
    An umbrella policy, although important, will not protect you in the event of a malpractice claim.

    It only extends the liability limits of your auto and homeowner's insurance policies.

    You can think of this type of insurance as malpractice for everyday living.

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    • #3
      No, but if the suit was for services provided by a physician working inside an LLC or corporation, damages should be limited to the assets of the entity. Of course, you would want to have medical offices (if you own the real estate) inside a separate entity. Still not perfect, but better than losing your home.
      Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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      • #4
        Johanna, not sure if I am getting this right- if a doc has a mega-verdict against them, more than their malpractice insurance coverage, as long as they are practicing as an LLC/S corp, the "only" assets that can be taken away from them are the assets of the practice (and not their personal assets)?

         

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        • #5
          If the malpractice lawsuit is against you for services that you performed, even if your practice is set up as a separate entity, you are not protected and the corporate veil can be pierced and your personal assets are at risk.

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          • #6
            Thanks for clarifying this!

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            • #7
              It is my understanding that this is not a piercing of the corporate veil, but a reflection of the fact that physicians are personally liable for malpractice.  Why MDs have the privilege of this special category is another matter...

              And don't worry, if you have a corporation, that will be sued as well!

              If you have a business liability suit against your practice, like a slip-and-fall, that would be limited to your corp if you have one.

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              • #8
                Thank you for bradening the scope of the discussion. I am interested because I am not currently working but am thinking of starting as an independent contractor. Based on the above, I would think it may be worthwhile to operate as an LLC at least to reduce business liability.

                Does anyone know if it is wise to title such LLC as "Tenants in entirety" with my husband- who is also a physician but a different specialty? We are in FL.

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                • #9
                  It doesnt really matter,  a corporation or any other such entity will never protect you from personal negligence which is what they consider malpractice or any tort really. An llc will only protect you from losses greater than that which is inside the business (say for RE investing), however, that varies on a state by state basis and in the end many are personally backing loans/contracts within the llc so its complicated.

                  Forming an LLC in no way will protect you from the clinical practice of medicine risk. It will cost more but provide zero liability protection in this regard. There may be other benefits but those arent good ones. There are other ways to protect assets within llcs depending on what youre doing.

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                  • #10
                    Sure but stop fear mongering. Haven't heard or seen plaintiff (read greedy) attorneys going after defendant physicians' personal assets (shock, I know). Mostly they'll settle at your insurance limit.

                     

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                    • #11
                      http://www.healio.com/ophthalmology/refractive-surgery/news/print/ocular-surgery-news/%7B6ea866b8-6af6-4eb7-91d2-e03faf1f4951%7D/record-lasik-malpractice-award-could-encourage-subsequent-suits

                       

                      $7.25 million award by jury.  The highest limits I've seen on policies are $2M/$4M per occurrence/yr.

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                      • #12
                        Uh yea, but they get capped (Juries don't know about damage caps). If you are in a non-capped state then yes. You are hosed.

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                        • #13




                          No, but if the suit was for services provided by a physician working inside an LLC or corporation, damages should be limited to the assets of the entity. Of course, you would want to have medical offices (if you own the real estate) inside a separate entity. Still not perfect, but better than losing your home.
                          Click to expand...


                          I apologize for not being clear. Larry is, of course correct if the suit is against you. If the suit is against another physician inside the entity, the LLC protects your assets. The Corp/LLC veil can be pierced if the shareholders/members operated as individuals rather than as actual shareholder/employees or members of the LLC.
                          Working to protect good doctors from bad advisors. Fox & Co CPAs, Fox & Co Wealth Mgmt. 270-247-6087

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                          • #14
                            Just because you havent heard of it doesnt mean it doesnt happen. I dont think I would live and practice in a state that had unbounded judgements, even though a low risk (and it is) its just not worth it. Overall lawsuits with wins in malpractice are lower than the losses, the amount that goes above limits of the policy and state are much lower than that. However, practicing in a state that exposes its physicians to even the possibility of such an outrageous claim does bring up the chances (which again may be increased/decreased based on specialty and employment situation).

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                            • #15
                              Thats what I meant Zaphod. DUH - don't practice in non-capped state. Also do appropriate asset protection which to be frank there are alot of shysters out there trapping physicians in "Asset protection". In a state - lets pick the best i.e. Texas - you can do basic asset protection and you'll be fine even if you have litigation against you.

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