Should I Go Bare?  Will I Be Sued Less? December 2002 By: Marc Singer, MBA, CFP As malpractice insurance renewal and non-renewal notices arrive in the mail, physicians are weighing whether to continue coverage. Liability polices may be unaffordable or unattainable. By going bare, doctors save on the premium cost and become their own risk managers. If physicians are sued, they can use a portion of those saved premiums to hire an attorney and offer a reasonable settlement. Many of our bare physician clients, as well as some attorneys and malpractice insurers, believe bare doctors are not sued as often as physicians who carry liability insurance. If bare physicians are sued, it is believed cases may be settled faster and cheaper. Conversely, high policy limits may be the bait that attracts plaintiff's attorneys. Simply put, it is more difficult for lawyers to try to collect on a judgment by attaching physician assets than it is to obtain a check from a malpractice insurer. Moreover, if physicians properly protect their assets, it is virtually impossible for attorneys to collect a judgment. Since plaintiffs' attorneys work on contingency, there is not much incentive to sue bare doctors. Going bare discourages lawsuits by lowering a physician's financial profile. Doctors have been reluctant to go bare because health insurers and  hospitals require malpractice coverage for licensure and privileges. This situation is changing.  Many hospitals and plans have recently altered their bylaws and rules to allow doctors to go bare in order to keep hospitals staffed and panels filled. Many other hospitals are expected to follow this trend in 2003. "If premiums rise to $40,000 or more annually, consider going bare!" To go bare or not to go bare? Here's our rule of thumb. If premiums rise to $40,000 or more annually, consider going bare. If you are sued once every six years, you will have saved $240,000 in premiums. This is close to the $250,000 policy limits you might have bought. The $240,000 would be available to pay legal fees and settlements. Most physicians, however, will not sustain a serious suit every six years. If your premium is $20,000 or less, it is probably not economically viable to self-insure. Before you go bare, it is critical for you and your family to assure that all of your assets are protected from potential malpractice lawsuits. If plaintiff's attorneys are convinced that they cannot collect on a judgment because there is no insurance or available assets, they will often drop the case or settle for a modest sum. Finally, consider your psychological make-up. Can you sleep at night without some form of coverage? Our experience has been that physicians feel going bare was absolutely the right decision, and become accustomed to the idea within a few months. Your Homestead still protected! Recently there was proposed federal legislation that would limit homestead protection to $125,000 and retirement plans to $1 million. On November 14th, Congress defeated this bill. It may be re-introduced in 2003.  Singer Xenos does not provide legal advice. Please consult with your own legal counsel.