Liability mistakes

By Patti S. Spencer
Intelligencer Journal
http://local.lancasteronline.com

LANCASTER COUNTY, Pa. –

li-ti-gious

function: adjective

1 : prone to engage in lawsuits or legal maneuvers esp. to an excessive degree stubbornly litigious defendant — from www.dictionary.com

We live in a litigious society where the immediate result of an injury is to look for someone to blame and sue. Protecting assets from claims has become increasingly important, especially to people in professions where high jury verdicts and outrageous claims have become common. Most hard-hit are physicians; but, also targeted are corporate executives, business owners and real-estate investors.

There are between 80 million and 90 million lawsuits filed in this country each year. That is more than 150 suits per minute. More than 70 percent of the world’s lawyers are right here in the USA, and we are adding new ones at a rate of 50,000 per year. Need I say more?

Here is a list of things pointed out by Alan Glassman, a Florida attorney, to watch out for to make sure you have as much protection as possible. Don’t make these liability mistakes:

• Insurance Gaps or Deficits

Vehicle ownership and driving, ownership of rental properties and many other liability risks present significant exposure to many people. Many individuals fail to recognize that a $2 million-to-$5 million umbrella policy can be placed “over” other coverages.

• Failure to have a financially solvent state-registered malpractice insurance carrier and appropriate malpractice coverage.

In an attempt to reduce the cost of fabulously expensive malpractice insurance, many professionals — physicians especially — buy their malpractice insurance from small, sometimes unstable, and maybe even unidentifiable malpractice insurance “carriers” who offer substantially lower premiums.

• Failure to procure a permanent tail or proper retroactive coverage when changing carriers.

If you need professional liability insurance and you switch carriers, you must make absolutely sure you have a “tail” policy or continuing coverage.

• Failure to keep assets out of the individual’s name.

To avoid liability, assets can be placed in a homestead, life insurance policies, IRAs, 401K and pension plans and 529 plans. Married professionals can hold assets as tenants by the entirety. Single and married professionals can consider family limited partnerships, limited liability companies and special trust arrangements that can provide at least some degree of creditor protection.

• Failure to make sure that professional practice assets are protected.

Real estate, sophisticated equipment, contracts — these are all valuable assets used in the business that need to be protected.

• Confusion over tenancy by the entireties.

Married couples may own joint property as tenants by the entireties. In states such as Pennsylvania, these assets are protected unless both husband and wife are sued by the same creditor.

• Waiting until it is too late.

When a claim is made against you, it is too late to protect yourself. These protections are available only if you arrange your affairs before claims arise. Don’t think “it won’t happen to me.” Crossing your fingers doesn’t help — take the time to do it right.

Patti Spencer, Esq., can be reached at 320 Race Ave., Lancaster, PA 17603; 394-1131; or Patti@spencerlawfirm.com. Her recently published book, “Your Estate Matters,” is available at Borders Book Shop and amazon.com. It also can be ordered by calling (888) 280-7715.
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