Are Malpractice and Liability Insurance Enough to Protect Your Assets?
By: Barry E. Haimo, Esq.
May 19, 2016
HAIMO: Insurance is just one line of defense. It’s important that you get it. However, insurance companies are going to do whatever they can do to avoid paying it out. And sometimes you don’t have enough coverage for unforeseeable claims. So the short answer is no. Malpractice insurance is insufficient.
If you’re a working professional—such as a doctor, lawyer, or accountant—you may be able to accumulate significant assets. But what are you doing to protect them?
Malpractice claims can happen in almost every professional industry. And though you may try your hardest to prevent any harm from coming to your patients, clients, or customers, you have to prepare for the unexpected. Unfortunately, a single suit brought against you – no matter how unwarranted or frivolous – can easily destroy years’ worth of hard work.
Insurance is an important part of asset protection, and every professional in a high-risk career should make sure they are fully insured. If you are often at risk for being sued, you should purchase as much coverage as is financially practical.
As mentioned above, malpractice insurance and liability coverage may not be enough to prevent worst case scenarios. But why?
Insurance May Not Cover Full Cost. As our society becomes more and more litigious, multi-million dollar claims are no longer the rarity they once were. Unforeseen accidents could result in unexpectedly high claims, with no guarantee that a jury will come to a reasonable verdict if the claim makes it to court. Even if you have a winning defense, you still have to pay to defend yourself.
In the case where you lose, the payout from your insurance company may not even come close to covering what you owe. One such incident can destroy your business and empty your bank accounts. Make no mistake—liability insurance is essential, but it’s only one part of a comprehensive asset protection plan.
Unpredictability of Insurance Companies. To make matters more uncertain, even the coverage that you do have is not a surefire thing. How so? There can be a number of holes in even the most extensive insurance policies. For example, legal accusations of violations of civil rights, environmental harm , sexual harassment, wrongful termination, or employment discrimination may not be covered. Other liabilities, such as alimony or civil torts, may also fall outside the scope of your protection.
Furthermore, insurance companies have a knack for failing to cover even the most straightforward and legitimate claims. The company may not be solvent enough to cover larger claims, or they may deny your claim altogether – or even drop you entirely – for a number of arbitrary reasons.
Because of these reasons, it’s important to weigh the value of your assets against the limits of your liability and/or malpractice insurance. Even if you are maxed out on insurance, there are many other ways to protect your assets. A complete asset protection plan utilizes various tools like life insurance, qualified retirement accounts, personal residence, irrevocable and revocable trusts, limited partnerships, and limited liability companies to protect your estate from lawsuits.
Consulting with an experienced asset protection attorney can open up a number of new ways to shield your life’s work from predatory outside interests. Contact us today to get started.
Barry E. Haimo, Esq.
Strategic Planning With Purpose
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