Normally, a physician’s standard claims-made insurance policy protects them from medical malpractice lawsuits. But what happens if someone brings forward a suit after the physician’s claims-made policy expires? One way that doctors and other medical professionals protect themselves from these lawsuits is with malpractice tail coverage.
So, what exactly is malpractice tail coverage, what does it do, and whom does it cover? This article explains what you should understand about this type of insurance. As you read, you will understand how to protect yourself whenever you switch jobs or change insurers.
What Are Standard Claims-Made Insurance Policies?
There are two common ways for physicians to financially protect themselves from lawsuits. The first way is to use an occurrence insurance policy. Occurrence policies specifically protect medical professionals from medical malpractice lawsuits that occur over the policy duration. If the physician changes jobs and purchases a new policy, they are still covered by their previous policy, even if the incident occurred several years before.
However, most physicians usually opt for a standard, claims-made insurance policy. With this type of medical malpractice insurance coverage, the protection stops whenever the policy ends. Thus, if coverage ends in December of 2020 and a lawsuit is brought in January 2021, the policy no longer protects the professional. Even if the incident occurred in November of 2020, when the physician’s claims-made policy was in effect, they still would not be protected from financial liability, because the policy lapsed.
This could be a costly event for a medical professional, who would suddenly be on the hook for potentially hundreds of thousands in damages. In this instance, tail coverage would protect the physician.
What is Malpractice Tail Coverage?
Although doctors can purchase occurrence insurance policies, most people opt for claims-made insurance policies. These policies are less expensive but have a limited life. One way that a physician protects themselves from claims after a policy ends is with tail coverage. Malpractice tail coverage will protect them from suits that are filed after an insurance policy is canceled or expired. Because of the period in which an individual can file a claim within the medical statute of limitations, a standard claims-made insurance policy may no longer be valid.
There are three key facts to note about tail coverage:
First, tail coverage protects both the physician and the patient. A patient is less likely to recover damages from a physician without insurance coverage. Likewise, physicians without tail coverage after a lapsed standard-claims insurance policy will be financially liable for any damages from a medical malpractice lawsuit.
Second, tail coverage cannot replace standard-claims policies. If there’s a claim made against a physician that took place during the time they only had tail coverage, then this doctor will not be protected from this lawsuit.
Finally, the tail coverage may only insure a physician for a portion of their claims-made insurance policy.
Who Needs to Purchase Malpractice Tail Coverage?
Although doctors with occurrence policies do not need to purchase tail coverage, those with claims-made policies should. However, tail coverage policies are usually expensive. In fact, it can cost up to three times more than a claims-made policy under certain circumstances. Yet, there are ways that doctors can save extra money on insurance, including:
- Purchasing a limited-term tail policy. With this type of policy, the insurance company may cover less of a doctor’s liability. Likewise, limited-term policies may also expire sooner or fail to cover the whole term of an expired claims-made policy.
- Opting for an extended reporting period endorsement (ERP). This is a form of tail policy that extends the insurance coverage period of a canceled or expired policy. With an ERP policy, doctors will have financial protection from claims made soon after their policy ends.
- Having their new doctor’s group pay for nose coverage. Nose coverage is usually added to the physician’s new claims-made policy. It protects physicians from acts that occur before the insurance policy went into effect.
Should You Go Without Tail Coverage?
If you are a physician that has a lapse in your policy, one of the best ways to protect yourself is with malpractice tail coverage. Although this type of insurance is expensive, it will protect you from financial liability for incidents of medical malpractice that took place during your previous policy.
If you are a physician without coverage that is facing a lawsuit from a previous policy and do not have tail coverage, then we can help. Contact the West Palm Beach medical malpractice attorneys at Lytal, Reiter, Smith, Ivey & Fronrath at (561) 655-1990 to discuss your case and determine how we can help.