At a party I attended last week I spoke with an orthopedic surgeon who had dropped malpractice coverage about a new insurance policy that covered only the cost of legal defense. This insurance paid up to $100,000 for legal fees required to defend a malpractice action, but he insurance provided no benefits to the plaintiff and his attorney in the event the jury awarded damages. The legal defense policy for this specialty was less than 20% of the cost of typical malpractice insurance.
Legal defense insurance is designed for physicians who have implemented asset protection planning. The theory of legal defense insurance is that once the plaintiff’s attorney finds out that there is no pot of liability insurance to pay legal fees and an award to the client, and where the doctor has ample funds to defend a lawsuit making the plaintiff’s victory uncertain, difficult, and expensive, the plaintiff’s attorney will be reluctant to take on even meritorious cases.
I spoke with Mr. Scott Stein who writes liability insurance for doctors and other professionals. Mr. Stein says that there are two principle companies selling legal defense coverage. One company is Gulf Atlantic and the other is Evanston Insurance. He prefers Evanston’s policy for several reasons. One reason is that the Evanston policy cannot force an insured doctor to accept a settlement and discontinue the legal defense, and another reason is that Evanston has a 30 year history in the area of professional liability insurance. To date, legal defense insurance is not available for businessmen or professionals other than physicians.
Legal defense insurance presumes effective asset protection planning put in place well before a lawsuit is filed. This is an example about how insurance and legal planning work together to provide the best overall protection. If you are a physician who has in place an effective asset protection plan and who wants more information about legal defense coverage, contact Mr. Stein at 954-349 6250. Thanks to Stuart Morris, Esq., an asset protection attorney in Palm Beach County, Florida for introducing me to Mr. Stein.