Umbrella policies

Q: I recently purchased a $2 million personal umbrella liability policy. If I'm ever sued for malpractice and the award is greater than the $1 million policy my hospital carries for me, can this umbrella coverage help me?

A: Probably not. The two insurance policies are completely different. A personal umbrella policy generally kicks in after homeowners or auto insurance policies are exhausted. For example, if someone slips on ice in front of your house, the payable damages may be greater than your homeowners coverage. Or you might be involved in an automobile accident where damages exceed your coverage. Personal umbrella policies may also cover you against lawsuits for libel, slander, and defamation.

But personal umbrella policies almost always exclude professional liability, such as medical malpractice claims. Nor do they generally cover activities such as bank or country club directorships, or a role as a director or adviser to a medical research company.

If you feel that your regular malpractice policy doesn't provide enough coverage, you might consider purchasing excess liability coverage, which would insure you for a higher dollar amount. Certain conditions and exclusions usually apply. Read any policy carefully.

Some insurers write professional umbrella policies with broader coverage and higher liability limits than others provide. For instance, the professional umbrella may be designed to insure unconventional therapies that are excluded in the primary policy. This is called layering. Since this type of coverage can be complicated, you should consult your attorney before buying it. Of course, these policies are significantly more expensive than personal umbrella policies, which cost just a few hundred dollars for millions of coverage.