Before securing a policy to cover work from a previous employer, physicians should examine all tail insurance options.
Whenever physicians leave a job, whether the reason is a new opportunity or retirement, they typically have to buy tail malpractice coverage. Tail insurance provides protection for any claims filed after a claims-made policy has been terminated. Claims-made policies are the most common type of medical malpractice insurance, but they only cover doctors while the policy is in force. This is why all doctors need to buy tail malpractice insurance after ending a claims-made policy.
Physicians seeking to purchase tail insurance have a wide variety of options to weigh carefully. The best option will depend on a number of factors, including each practice’s unique makeup and the exact procedures the physician was performing.
Tail malpractice coverage can be expensive depending on the location of the practice, so knowing all the options will ensure physicians receive competitive pricing with the proper coverage in place.
Here are three unconventional tail policy options:
1. Tail policy with lower limits
Doctors can buy tail coverage with lower limits than the limits they had on their claims-made policy. The most common limits on a medical malpractice insurance policy is $1 million per claim/$3 million in aggregate.
They could buy a tail policy, for example, with limits of $200,000/$600,000. The lower limits would decrease the overall cost of that policy. We don’t recommend this option to most physicians because higher limits offer additional financial protection, and they never want to find themselves short on coverage.
2. Short-term tail malpractice policy
Doctors can buy a one-year, two-year, or three-year policy. As time passes, the risk of having a claim filed against them decreases. Though this provides another way to save money when buying tail malpractice coverage, they should carefully consider the pros and cons of choosing this type of policy.
Before heading down the short-term policy route, they should think about the makeup of their practice, specialty, and the types of procedures performed. For example, obstetricians typically have a longer window of risk because it can take longer for a claim to be filed when a child is involved. It is always recommended that physicians sit down with their malpractice insurance agent to discuss all of their options.
3. Tail policies with aggregate limits that renew every year
As mentioned above, the most common aggregate limits on a medical malpractice insurance policy is $1 million/$3 million. Since some tail coverage policies are lifetime, the $1 million/$3 million limits may not be enough in the long term.
To help ensure physicians have the correct amount of coverage in place, some insurance companies are now offering tail policies in which the aggregate renews each and every year. Though this can increase the price of the tail policy, it will give peace of mind in securing renewing coverage. As always, the final choice will depend on the physician’s unique situation, so it’s best to consult with a medical malpractice agent while navigating options.
Renewable aggregate tail insurance policies are fairly new, and not every insurance company offers them. Here are two real tail malpractice insurance quotes for an internal medicine physician client of ours practicing in Lake County, Ill.
Lifetime Tail Option #1
Total cost: $58,000
Lifetime Tail Option #2
Total cost: $37,500
Whichever tail malpractice coverage option physicians choose, they should always make certain the coverage put in place will exceed the potential exposures of their medical practice and the procedures performed. There will always be new options available as insurance companies try to innovate within this changing healthcare landscape, so make sure to know the options.
Erik Leander is the chief technology officer and chief information officer of Cunningham Group, a medical malpractice insurance agency.