Practice of Medicine
Tail Coverage: What It Is and Who Needs It
May 26, 2020
Whether you’re retiring from the practice of medicine or changing jobs, you won’t be leaving your risk of a medical malpractice lawsuit from your old position behind. A patient can sue you months or even years after you’ve stopped treating them. That’s where an extended reporting endorsement, or “tail” coverage, can protect you.
Medical professional liability (MPL) insurance is offered in two forms: claims-made, which covers only those events that are reported while the policy is in effect and occur on or after the retroactive date on your policy, and occurrence-based, which covers any event that occurred while the policy was in effect, regardless of when it is reported. If your policy is claims-made – and the vast majority of MPL policies are – and you are retiring or changing jobs, you probably need tail coverage.
Let’s say a physician had a claims-made policy in effect from January 1, 1997, until December 31, 2018. The physician retires from the practice of medicine and cancels their coverage. In July of 2019, a former patient sues the doctor based on care received in October 2018. Because the claim is made after the policy expired, it would not be covered. Without tail coverage, the physician would have to pay all their legal expenses and any indemnity payments or settlements out of pocket.
Unfortunately, tail coverage can be quite expensive, which is why some physicians choose to forgo it. Of course, lawsuits are even more costly, so going without tail coverage is a big financial risk. The good news is that some MPL policies include free tail coverage to retiring physicians who have reached a certain age and have held a policy with them for a specific amount of time. Check the language in your policy or contact your insurance agent to see if yours does.
If you are changing jobs or insurance providers but not retiring, you will need to either carry forward your current retroactive date and purchase prior acts coverage, or purchase an extended reporting endorsement. Both will provide the protection you need, but prior acts coverage, if available, is typically less expensive.
When purchasing a new MPL policy, it’s always a good idea to ask your agent if and under what circumstances tail coverage is provided. If it’s not included, find out the cost so you can be prepared for the expense if you retire or move to a new position.
An extended reporting endorsement – often called an “ERE” or “tail coverage”– is an endorsement to your policy that provides a period of time to make or report a claim after a policy expires or is cancelled.
A retroactive date is the date from which you have held uninterrupted professional indemnity insurance cover (even if you changed insurers during this time) or a date in the past from which your insurer has agreed to cover you. Any claims that arise from events prior to this date are not covered by your insurance.
The information provided in this resource does not constitute legal, medical or any other professional advice, nor does it establish a standard of care. This resource has been created as an aid to you in your practice. The ultimate decision on how to use the information provided rests solely with you, the PolicyOwner.