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121 OPHTHALMOLOGY BUSINESS October 2014 insurance policy cannot pay its portion, either because you failed to comply with the conditions of the base policy or because the base layer insurer has become insolvent. Be aware that umbrella policies usually do not protect you against damages you cause intentionally, liability that you accept contractually, liability related to planes, boats, and other "toys" (which should be covered under other policies), or damages aris- ing out of business or professional pursuits (which is usually covered by your malpractice insurance). Big risks, little premiums If all this talk about millions of dollars makes you think, "This insurance must be expensive," guess again. The perils covered by um- brella insurance are as rare as they are catastrophic, and the premium reflects this fact. The average $1 million umbrella policy comes with an annual premium ranging from $300 to $500, while a $5 million policy might cost you $600 to $700 per year, or about 2 dollars a day. If you have a weak credit history, a bad driving record, or teenage drivers in your house- hold, you may pay a little more. While paying the premium is easy, knowing how much coverage to get is the hard part since it's not an exact science. The best practice here is to get somewhere between $1 million in umbrella coverage (obeying the "something is better than nothing" principle) and as much as your insurer will allow (which conforms to the principle of least regret). Getting enough insurance to cover all your assets plus another $500,000 for legal defense seems like the happy medium. For example, a physician with a net worth of $2 million might opt for $2.5 million in coverage. As you make your deci- sion, you might also consider factors such as how often you have guests in your home, how many miles you drive, and whether your kids are likely to cause you to incur liability. The best place to start shopping for coverage is with the insurance companies who currently cover your autos and your home since these policies are prerequisites for coverage. When you set up your coverage, make sure there's no gap between the top limit of your base layer coverage and the bottom limit of your umbrella policy. For example, if you have a $300,000 liability limit on your home, you might find you - self out of pocket for $200,000 when you incur a $1.5 million liability and also have $1 million in coverage from your umbrella policy. The first Mr. Utley is an attending advisor with Physician Family Financial Advisors, a fee-only financial planning firm helping physicians throughout the U.S. to make a plan and get on track with saving for college and investing for retirement. Visit PhysicianFamily.com for more information. Mr. Keller is the founder of Physician Financial Services. Based in New York, he offers income protection and wealth accumulation strategies for physicians nationwide. He can be contacted at LKeller@physicianfinancialse vices.com. About the authors $300,000 would be paid by your base layer, you would pay the next $200,000, and your umbrella would pay the remainder of the claim. A little diligence in the process can save you a bundle. As a physician, you already know people think you've got deep pockets. By putting a cheap but vital second layer of coverage on top of your base layers, you can show them the money if your legal team can't show them to the exits first. EW This "excess liability insurance policy" sits on top of your other coverage and picks up the liability where the base layers leave off.