Practice of Medicine

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Tail Coverage: What It Is and Who Needs It

Executive summary: 

Tail coverage may be necessary when you’re retiring from the practice of medicine or changing jobs to be certain that you’re still insured against a medical malpractice lawsuit that arises once you’ve retired or changed positions. Since most medical professional liability insurances do not cover those types of medical malpractice lawsuits, tail coverage may be a needed protection.       


Recommended actions: 

  • Determine whether your medical professional liability insurance is a claims-made policy. If so, you may need to obtain tail coverage. 

  • Review your medical professional liability insurance policy to determine whether free tail coverage is offered.  

  • Contact your insurance agent to determine the cost of obtaining tail coverage. 
 

Whether you’re retiring from the practice of medicine or changing jobs, you won’t be leaving your risk of a medical malpractice lawsuit behind. Patients can sue you months or even years after you’ve stopped treating them.  

Medical professional liability (MPL) insurance is offered in two forms: 

  1. 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. The retroactive date is the date from which you have held uninterrupted professional indemnity insurance (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. 

  2. 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 an extended reporting endorsement (ERE), commonly known as tail coverage. This 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. 

Here’s why you may well need such coverage. 


Let’s say a physician had a claims-made policy in effect from January 1, 1997, until December 31, 2020. The physician retires from the practice of medicine and cancels their coverage. In July of 2021, a former patient sues the doctor based on care received in October 2020. Because the claim is made after the policy expired, it would not be covered. Without tail coverage, the physician would have to pay all 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 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. 


Lessons learned:  
  • Contact a few insurance companies before committing to a policy to determine the best valued tail coverage available. 

  • Before signing a new medical professional liability insurance policy, ask the agent if and when tail coverage is provided. 

  • Purchase tail coverage that will last as long as the statute of limitations for a medical malpractice claim in your state. 

Potential damages: 

Without tail coverage, a physician would have to pay out of pocket for all legal expenses and any indemnity payments or settlements. Lawsuits are costly, so those expenses could add up quickly.  

Quiz 
Answers provided below 
True or false? 
Question 1: Claims-made policies cover all types of events, no matter when they occurred. 
 
Question 2: My medical professional liability insurance policy may include free tail coverage.  
 
Question 3: If I have a claims-made policy and forgo tail coverage, I would be financially responsible for any medical malpractice claim arising from my old position or from before I retired.  
 
Answers: 
Question 1: False. Claims-made policies only cover events that are reported while the policy is in effect and occur on or after the retroactive date on the policy. 
Question 2: True. Many medical professional liability insurance policies offer 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. Question 3: True. Because claim-made policies only cover events that are reported while the policy is in effect, they will not cover any medical malpractice claims that arise after you retire or switch positions.  
 

05/20

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Disclaimer

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.