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Umbrella Insurance for Physicians: What You Need To Know

We all know that physicians need a lot of insurance policies to protect their income, guard against financial losses, and for asset protection reasons. Umbrella insurance is an essential tool for physicians to be aware of, as it is one of the cheapest forms of asset protection that you can purchase, and as a physician and high income earner, you will be glad that you have it if you are ever in the unfortunate position of being sued past the limits of your homeowner’s or auto insurance policies. It offers extra liability coverage on top of (some of) your pre-existing insurance policies at some of the cheapest rates that you can buy peace of mind for. 

Below, we cover how umbrella insurance works, when doctors should start considering getting a policy, how much it typically costs, and other frequently asked questions we see within our Physician Facebook groups.

Disclaimer: Our content is for generalized educational purposes.  While we try to ensure it is accurate and updated, we cannot guarantee it. We are not formal financial, legal, or tax professionals and do not provide individualized advice specific to your situation. You should consult these as appropriate and/or do your own due diligence before making decisions based on this page. To learn more, visit our disclaimers and disclosures.

What is provided and covered by umbrella insurance for physicians

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What is umbrella insurance and how does it work?

While we all know about disability and life insurance, homeowners and auto insurance, malpractice insurance, and health insurance, many early career physicians have not heard about umbrella insurance. We try our best to make sure that you have, because feel most physicians should carry it.  It’s one of the cheapest forms of asset protection that you can have and provides tremendous peace of mind should someone who slips on your property or with whom your teenage child gets into a car accident finds out that you are a physician.

Umbrella insurance stacks on top of some of your other insurance policies, including your homeowners insurance or renters insurance (depending on your current living situation) and your auto policy, to provide additional liability coverage. Car, homeowners, and renters policies have limits in how much they cover and protect you for. In the unfortunate situation where a claim arises that exceeds your coverage limits, your umbrella policy kicks in to protect you. Otherwise, you would have to cover any excess settlement charges above your limits out of pocket or potentially lose your assets.

It is important to note that umbrella insurance helps cover claims relating to injury to others and damage to their property. It does not cover damage to your home or other property.

Given that physicians are known for their high-earning potential, they can be targets for massive lawsuits, both in and out of work. A critical thing to know is that while umbrella insurance protects you from many of these claims, it does not apply to your malpractice policy and will not shield you from settlements against you in this realm.

What does umbrella insurance cover for physicians?

Coverage can depend on your specific policy, but it typically covers claims or expenses relating to:

  • Personal property damage: damages to someone’s car or home

  • Bodily injury liability: damages to another person

  • Landlord liability: issues that arise with your rental properties

  • Libel, slander, defamation of character, etc.

  • False arrest, imprisonment or detention

  • Legal costs associated with covered claims

Does umbrella insurance cover medical malpractice claims that settle for above policy limits?

A personal umbrella policy usually does not cover you in the case of a medical malpractice lawsuit. This highlights the importance of malpractice insurance as another critical step in your asset protection strategy as a physician. While it’s statistically unlikely that you will have a malpractice settlement that settles for above your policy limits if you are adequately insured, if this possibility is something that will keep you up at night, you will want to consider a different strategy for asset protection to protect against that risk.

When should doctors buy umbrella insurance?

In order to get umbrella insurance, you have to carry certain minimum coverage limits on your existing homeowners/renters and auto policies. This minimum limit can vary by state, but typically runs in the $300,000-$500,000 range for liability coverage.

Once you have a net worth or assets worth more than your existing insurance limit, you should consider getting an umbrella policy to cover the excess.

Depending on how far along they are in their career and how many assets they have, most physicians on our physician communities say that they carry umbrella insurance policies for $1-$5 million.

If you are a trainee with zero assets and a resident’s or fellow’s salary, you likely won’t need an umbrella policy yet. But as soon as you are practicing and have your first attending paycheck (a judge could garnish your wages in a settlement verdict) or if you have purchased a home during training, you will likely need to look into getting a policy. 

How much umbrella insurance coverage physicians should have, and how much it costs

How much umbrella insurance do physicians need?

How much coverage to get depends in part on how much you have in assets that you need to protect. The more you have, the higher a policy you need. Also know that you can have a settlement against your wages or future income, so once you become a high income earner, many physicians will choose to get the maximum amount they qualify for given how (relatively) cheap the protection is.

Umbrella insurance typically comes in increments of $1 million. Most physicians on our communities report that they have policies ranging from $1 million to $5 million, though some policies can go up to $10 million.

As your net worth and assets increase, make sure you assess the growth against your coverage, upping your umbrella policy limit to reflect the change.

It’s also important to remember that there can be costs associated with lawsuits that go above and beyond the settlement amount, such as legal costs. Depending on your policy, your umbrella insurance also likely helps with this.

How much does umbrella insurance cost?

How much your policy will cost can depend on a few different factors, including the insurer you select for your policy, the coverage amount, your location, and risk factors. For example, if you are a well-known public figure or have “high risk” factors, you will likely have higher premiums.

Examples of “high risk” factors that can increase your premiums are often the same ones that increase your baseline insurance policies, such as:

  • Owning jet skis

  • Having a pool or trampoline

  • Having a teenage driver in the household

A baseline $1 million umbrella policy may cost as little as $150-$300 a year, and the price per million typically decreases with each additional million you add to your coverage. Risk factors such as those above will make them more expensive depending on each company’s underwriting criteria.

Know that you’ll often get discounts if bundle your insurance, so if possible, getting your automobile and homeowner’s policies with the same insurer that you get your umbrella policy with will be cheaper. 

Is umbrella insurance worth it?

We rarely talk in absolutes, but this one is as close as we can get to saying, “absolutely.” Almost all physicians need an umbrella policy. Umbrella insurance is one of the cheapest forms of insurance for the amount of coverage that you get, making it a no-brainer and easy addition to your physician asset protection plan.

How do I buy umbrella insurance?

Many companies will over multi-policy discounts if you already have your auto, homeowners, or renters policy with them. Check with your insurer first.

It doesn’t hurt to shop around your current policies at the same time, especially if you haven’t recently. Your current insurer might not offer umbrella insurance, but you might be able to move your existing policies and get an additional discount, reducing their cost as well, when you add on an umbrella policy with a company that offers the different types.

While you can get a policy directly through some companies through dedicated agents, it’s often better to work with an independent insurance broker who can help you shop plans with multiple companies, allowing you to find the most competitive pricing available for your situation and needs.

Additional insurance resources for physicians

If you’re looking for an independent insurance broker to help you shop insurance policies, check out our insurance agents for physicians.

Umbrella insurance is only one critical insurance component to asset protection.

Types of insurance all physicians should consider having

Learn more about protecting your wealth with our:

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