A foundational aspect of a basic asset protection strategy for any nurse practitioner is having a personal umbrella policy. If you own a business, you will want to make sure you have a commercial umbrella policy as well. Essentially, an umbrella policy is an insurance policy that is “global” in nature. It protects your personal assets AND future personal assets, such as wages, against the cost of losing a lawsuit due to an accident where you are found at fault (car accident for example).
A personal umbrella policy covers you for accidents that are caused by you PERSONALLY. This would be a car accident on your way home from work that kills another driver, or someone falling on your driveway and breaking a hip, as examples…
A commercial umbrella policy covers your BUSINESS (and you if a lawsuit ever reached that far) for accidents that are caused through it. Again, this would be a car accident that happened while you were driving your company vehicle, or granny Jane falling and smashing her head through the aquarium in your waiting room, as examples…
In general, an umbrella policy picks up where your auto, homeowners, or business liability policies leave off. What this means is that it pays whatever your other policies do not cover. For example, your auto insurance policy likely only has a $300,000-$500,000 limit to it. This means that the auto policy would only cover $300,000-$500,000 in expenses if an accident happened. Well, what if you were sued and the judge awarded the plaintiff $1,000,000? You would be up shit creek. I hope you have $500,000 laying around to make up the difference… This is where the umbrella policy kicks in. It covers the difference.
An umbrella policy typically has a $1,000,000-$2,000,000 limit to it. It pays for any remaining balance in a lawsuit after your PRIMARY insurance policies pay out their maximum limit. As you can see, this is something that every single one of you reading this needs to have.
Another great thing about umbrella policies is that it covers you for more than just a car accident. It also can cover accidents that occur on a rental property you own, personal injury lawsuits that arise from defamation and slander, and multiple other issues depending on the policy. This is why you need to have a detailed conversation with your insurance broker and read the policy yourself!
Now, a personal or commercial umbrella policy WILL NOT cover anything related to malpractice. So, be totally aware of that fact. An umbrella policy basically covers you for everything else. Be sure to read up on malpractice here.
An umbrella policy would also not cover you for lawsuits directly related to your business, such as a sexual harassment or wrongful termination lawsuit. It would also not cover you for any type of criminal activity or restitution pay.
So, how do you get an umbrella policy? Well first you need to have primary insurance coverage. An umbrella policy is just a form of secondary insurance. You need to have auto insurance, homeowner’s insurance, landlord insurance, and/or business liability insurance first. Remember, an umbrella policy pays any EXCESS your primary policies do not meet.
Listen, when you are a successful nurse practitioner entrepreneur, you will begin to accumulate wealth and more assets… Even if you are just an employed nurse practitioner and have assets (house, car, etc.), you are a target. For these reasons, it is CRITICAL you call your insurance agent and get an umbrella policy immediately. It only costs like $200 a year… that is worth the piece of mind in my opinion!