Your questions about liability insurance, answered
What you need to know to protect your personal and practice assets.
Asset protection for physicians always includes liability insurance. Using insurance the right way - and knowing the conditions and exclusions of your policy - can be complicated.Nothing replaces an experienced, multiline liability insurance agent to answer questions and make sure you have the right tools. As such, I turned to David Moore of Shepherd insurance in Scottsdale, Ariz. Moore has decades of high-level experience in advising businesses and their owners around the country, including many of my own clients.Here are his answers to eight of the most common questions physicians ask about their personal and business insurance coverage.Disclaimer: Please remember that nothing in this article is meant as legal or insurance advice. Know the details of your policy and your specific circumstances. Please consult your attorney or insurance broker with specific questions.Ike Devji, JD, has practiced law exclusively in the areas of asset protection, risk management and wealth preservation for the last 16 years. He helps protect a national client base with more than $5 billion in personal assets, including several thousand physicians. He is a contributing author to multiple books for physicians and a frequent medical conference speaker and CME presenter. Learn more at www.ProAssetProtection.com. Â
Your questions about liability insurance, answered
Q: I’m transferring my home to a trust for estate planning purposes. What do I need to tell my agent?
A: It’s important that you call your agent so she can make sure that the trust is properly named on the homeowner policy. This protects both the trust and the individuals who live in the home, should a liability suit be brought against them.
Q: We bought some investment real estate, e.g., a rental home and commercial building, in our own names and will have a tenant. We are now transferring it to an LLC. What’s the effect on our insurance?
A: Inform your agent that a change in ownership status has occurred so that the LLC can be properly added as a named insured to the policy. Failing to do so can leave your commercial properties exposed to liability. Additionally, be sure to tell the tenant that the LLC needs to be named as an additional insured on their policy as well. You can get a certificate of insurance from the tenant’s agent for verification.
Q: My rental home (or a “flip” house) will be empty for a few months while it is being re-modeled. Do I need to do anything with my insurance?
A: If the home is unoccupied, a vacancy clause could leave you exposed for claims like water damage or vandalism. Check with your agent to find out the terms of your policy. If it is being remodeled, it’s important to get a certificate of liability insurance from your contractor to validate his coverage. You also need to discuss the idea of putting a builder’s risk policy in place to insure the project during the remodel stage.
Q: My child will be going away to college with one of our cars. Should we change anything in our auto insurance policy?
A: The most important thing you can do is to have a conversation with your college-aged child about responsibilities while at school. Will the car be parked in a safe, secure place? How will your child respond if a friend asks to borrow your vehicle? Don’t let your child jeopardize your insurance program. Set boundaries. Your insurance agent can assist you in this conversation.
Q: I have a new driver in the house. How do I add him to the policy?
A: Call your agent with the new driver’s date of birth and driver’s license number so that he can be added to your policy.
Q: Will my new driver be covered on all of our cars or just the one that he primarily drives?
A: New drivers generally have access to all the vehicles in the household unless the title of a particular vehicle is different. When this is the case, a separate policy might be more sensible.
Q: My kids are coming home from college and may drive my cars while they visit. Am I covered?
A: Yes, as long as they have your permission and were never deleted from the policy when they left for school.
Q: If we ever rent our home or cabin out on Airbnb or VRBO, do we need special insurance?
A: Most standard and preferred personal lines carriers favor long-term rental arrangements and do not insure properties that are rented out on a daily, weekly or even monthly basis. If an Airbnb or VRBO rental property sounds enticing to you, keep this in mind: The premiums to insure them are higher, and you’ll want to secure high limits of liability because the exposure of frequent, unknown renters is greater as well.