Why the next 100 days threaten physicians’ assets

May 26, 2020

We’re entering a period of significantly increased liability.

As America returns to work after both Memorial Day Weekend and coronavirus quarantines, predictable seasonal risks put physicians’ assets at risk. 

 

This Week Raises Your Personal Liability 

Memorial Day starts the period known as the “100 Deadliest Days”, a period of significantly increased liability for a variety of injuries and accidents, including fatal car accidents, that runs through Labor Day. While not all of these accidents can be attributed to children many of them are, and car accidents are the leading cause of death among teens, with those age 16-19 being most at risk. In addition to the obvious horrific tragedy of losing a child or causing the death or grave injury of a passenger or another driver, you face financial liability for your children that could be life changing for an entire family. 

During the summer teen drivers are out of school, have significant free time, and spend more unsupervised time behind the wheel on non-essential, discretionary travel. The vast majority of these teens are driving vehicles owned and insured by their parents, who have significant liability for the actions of their children. I’m concerned that this usual risk has been significantly increased by COVID19 lockdown conditions that have left many teens (including your adult children that may be home for the summer, or longer, from college etc.) bored, restless, and feeling socially deprived of the company of their peers. This rush to “make up for lost time” is being accompanied national surge in speeding tickets. Increased speed is being accompanied by a loss of driving skill due to being out of practice, a bad combination. 

 

Risk Management Essentials 

1.    Know all the risks and control predictably dangerous driving behavior. There are four primary driving behaviors and fact patterns that lead to accidents, serious injuries, and fatalities with teen drivers; speedingfailure to wear a seat beltdistracted driving (including distractions caused by passengers and smart phones, distractions are involved in 2 out of three cases), and nighttime driving. Educate your children about these risks and take steps to control their behavior. If you can’t make them confirm, take the keys.

While automobile accidents are the biggest part of this seasonal risk, they certainly aren’t your only source of parental liability. Some other common recurring risks to be aware of include:

  • Social media liability, including cyberbullying, stalking, hacking, and sexting

  • Injuries incurred at your home, vacation homes, or incurred with your recreational vehicles, boats. etc.

  • Issues of consent for sexually active teens

  • Access to potentially dangerous items in your home including alcohol, prescription drugs, and firearms

 

2.    Don’t draw personal liability into your business. I have repeatedly advised readers to avoid leasing or purchasing their (and their family members’) personal use vehicles in the name of their medical practice or other active business in order to obtain a tax deduction. While your CPA is correct about the tax advantage of doing so, that amount of savings is not worth dragging a potential seven figure liability for a serious accident into your primary revenue producing business. If you are doing so, consider holding title personally instead and discuss taking a car allowance instead with your CPA. 

 

3.    Be heavily insured and know the details, not all policies are the same. Insurance is your most cost effective and predictable line of defense. Automobile insurance with both a high limit personal liability umbrella of at least $2MM and at least mid-six figures in un-insured (UIM) an underinsured motorist (UM) coverage is vital. Do not assume that you have adequate UIM and UM coverage just because you purchased an umbrella, the limits are often separate and significantly lower and those most at risk from the actions of your children may need to reply upon this coverage, or your life savings, if you don’t have it. If your adult children are using vehicles you own, consider transferring title to them and getting them separately insured to distance yourself from their liability. 

 

4.    Actively protect yourself beyond the limits of your insurance policy. While heavy insurance coverage is a key part of every physician’s asset protection plan, you cannot rely on insurance alone to be a magic bullet that protects you and your wealth against a universe of infinite risk. Gaps in coverage include exclusions, policy limits and reductions in coverage for intentional acts, driving while impaired and not wearing a seatbelt, as just a few common examples.