Alyssa Lane
Medical malpractice insurance, also known as medical professional liability insurance, is a type of insurance that protects medical professionals from financial and reputational damage in the event of a medical malpractice claim. When changing jobs, many doctors opt for the tail coverage offered by their employer. However, partnering with a broker that specializes in malpractice tail coverage can save doctors up to 20% on their premiums. This type of insurance covers any financial liability associated with a medical malpractice claim, including legal fees, expert witnesses, settlements, and damages awarded to the plaintiff. It is important for doctors to carefully evaluate their tail coverage options to ensure they have adequate protection in the event of a claim.
| Characteristics | Values |
|---|---|
| Purpose | To cover any financial liability associated with a medical malpractice claim, including legal fees, expert witnesses, settlements, and/or any damages awarded to the plaintiff. |
| Coverage | Protects doctors against any future claims that have yet to be reported, including claims made after a claims-made policy is canceled. |
| Cost | The cost of tail coverage varies, but it is typically a percentage of the annual premium and can be as much as 1.5 to 2 times a typical annual malpractice insurance premium. |
| Providers | Tail coverage can be obtained from the current insurance carrier or from other financially reputable providers. |
| Alternatives | Prior-acts or nose coverage can be purchased from a new carrier to cover claims that occurred with a prior carrier. |
| Importance | Medical malpractice insurance is not required by law in most states, but it is essential for protecting your assets, reputation, and license in the event of allegations of medical negligence or liability claims. |
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What You'll Learn
Understand the difference between 'claims-made' and 'occurrence' insurance
When evaluating a medical malpractice insurance tail policy, it is crucial to understand the difference between claims-made and occurrence insurance. Claims-made insurance policies cover claims that are made and reported during the active policy period. This means that the incident leading to the claim can occur at any time as long as the claim is made and reported while the policy is in effect. Claims-made policies typically have strict requirements regarding the timely reporting of a claim, with some policies providing a specific window for reporting after a claim is made.
Occurrence insurance, on the other hand, provides coverage for incidents that happen during the policy period, regardless of when the claim is filed. In other words, an occurrence policy is active for incidents that occurred during the policy period, even if the claim is made years later. This type of insurance is typically more expensive than claims-made policies due to the extended period of coverage.
It is important to note that tail coverage, or extended reporting period (ERP) coverage, is often associated with claims-made policies. Tail coverage is an additional form of protection that allows for the future reporting of claims that have yet to be brought to your attention. This type of coverage is useful when transitioning between insurance policies or employment, as it provides financial and reputational protection in the event of a medical malpractice claim.
While claims-made policies are more common for certain types of insurance, such as management liability, occurrence policies are often used for general liability coverage. When evaluating a medical malpractice insurance tail policy, consider the unique circumstances and risks associated with your medical specialty, as this will impact the type of coverage that best suits your needs.
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Know the risks of not having tail coverage
While tail coverage is not mandatory for healthcare providers, forgoing it can have serious financial and reputational repercussions.
Medical malpractice insurance, or medical professional liability insurance, protects physicians from allegations of medical negligence or liability claims. It safeguards their assets and reputation, and is required for hospital privileges, employment, and payer contracts.
If a doctor chooses to forego tail coverage, they are susceptible to malpractice claims from former patients. Former patients can bring claims months or even years after the alleged moment of malpractice, long after the doctor's effective policy period has ended. Without tail coverage, the doctor will be personally liable for any losses, as well as defence attorney and court fees.
The financial outcome of going without tail coverage can be significant. Tail coverage rates differ across insurance providers, but one can expect to pay anywhere from 1.5 to 2 times their current annual premium. While this may seem expensive, it is worth it to stay protected after your current claims-made coverage ends.
Doctors who partner with a broker specializing in malpractice tail coverage can save up to 20% while maintaining A-rated protection. Brokers can gather and compare multiple quotes from different carriers to find the best rate, reducing stress and simplifying the application process.
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Know when you need to purchase tail coverage
When changing jobs in your medical career, it is important to consider your options for tail insurance. While many doctors opt for the tail coverage offered by their employer, partnering with a broker that specializes in malpractice tail coverage can save you up to 20%.
You will need to purchase tail coverage if you want to avoid gaps in your coverage. If you have a claims-made policy and do not buy tail coverage, there is no protection for medical liability claims made after the policy lapses. This is because claims-made coverage is only valid under your current employment status.
You will also need tail coverage if you switch practices or insurance providers. For example, if you leave a solo or group practice for employment at a hospital, or if you merge an independent group or solo practice with another practice.
Additionally, if you are considering cancelling or switching your claims-made policy, you will need to either purchase tail coverage from your current carrier or nose coverage (prior acts coverage) from your new carrier to avoid a gap in your coverage.
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Understand the costs of tail coverage
The cost of tail coverage for medical malpractice insurance varies depending on the insurance carrier and the state. It is typically a percentage of the annual premium. While it may have higher upfront costs, tail coverage can save you money in the long run by protecting you from the financial burden of legal fees, settlements, and other related costs that come with malpractice claims.
When evaluating the cost of tail coverage, it is important to consider the potential costs of not having it. Without tail coverage, physicians may be held personally liable for malpractice claims brought against them after their previous insurance coverage has ended. This could result in significant financial losses, as the cost of defending against a malpractice claim can be extremely high.
There are a few ways to obtain tail coverage. One option is to purchase it from your current insurance carrier when your policy ends. Many carriers offer a window of time, typically 30 days, after the policy lapses for you to exercise the option to buy their tail policy. You can also shop around and compare quotes from different insurance carriers to find the best rate. Working with a broker specializing in malpractice tail coverage can help you save money and find the right coverage for your needs.
It is worth noting that some carriers offer "Retirement Tail Coverage" or "free" tail coverage under certain circumstances, such as retiring from the practice of medicine or in the case of death or disability. Additionally, prior-acts coverage or "nose coverage" is an alternative to purchasing a tail policy. This option provides coverage for claims related to previous years after renewing your current plan with a new carrier. However, new employee contracts often prohibit this option to avoid assuming risks from a physician's previous employer.
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Consider partnering with a broker
While many doctors opt for the tail coverage offered by their employer, partnering with a broker that specializes in malpractice tail coverage can bring several advantages. Brokers have a deep understanding of the medical malpractice industry and can use this knowledge to streamline the process of securing tail insurance. They can save you time by gathering and comparing multiple quotes from different carriers to find the best rate. A good broker will have relationships with 100+ carriers and will be able to recognize a good rate. They will also evaluate carriers and conduct thorough policy analyses, reducing the stress of the process.
A broker can also simplify the application process by submitting application paperwork to multiple carriers on your behalf. They can provide insights based on your risk profile, helping to eliminate undesirable carriers and concentrate on working with specific underwriters whose risk appetite aligns with your needs. This can be especially important as each medical specialty has its own risk profile from an insurance standpoint, requiring specialized tail insurance. A good broker will ensure that the policy reflects the precise circumstances of your practice.
Brokers can also help you save money. Doctors who partner with a broker specializing in malpractice tail coverage often save thousands of dollars while maintaining A-rated protection. Tail malpractice insurance rates differ across insurance providers, but you can expect to pay anywhere from 1.5 to 2 times your current annual premium. A broker can help you find the most competitive rate, potentially saving you up to 20%.
In summary, partnering with a broker can be a wise decision when evaluating a medical malpractice insurance tail policy. A good broker will have the expertise and relationships to streamline the process, saving you time and money, while also ensuring that you get the coverage you need.
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Frequently asked questions
Medical malpractice insurance, also known as medical professional liability insurance, protects physicians from allegations of medical negligence or liability claims. Tail coverage, or Extended Reporting Period (ERP) coverage, is an endorsement that extends your ability to report claims after a claims-made policy is canceled. It covers any financial liability associated with a medical malpractice claim, including legal fees, expert witnesses, settlements, and/or any damages awarded to the plaintiff.
A claims-made policy only covers claims that occur and are reported during the active policy period. If a claim is made after the policy is canceled, tail coverage allows you to report it to your prior carrier. Tail coverage is necessary to protect yourself financially and legally in the event of a medical malpractice claim after your claims-made coverage ends.
The cost of tail coverage varies across insurance providers but can be expected to be anywhere from 1.5 to 2 times your current annual premium. Tail coverage can be more expensive than a claims-made policy, but it is worth considering the financial outcome of not having tail insurance.
You can obtain tail coverage from your current insurance provider or shop around for tail coverage from other reputable providers. If you are switching insurance providers, you can purchase "nose coverage" from your new carrier as an alternative to tail coverage.
