Understanding “Tail Coverage” In Medical Malpractice Insurance For Physicians

Physicians may be changing employers or practice settings in today’s volatile health care market more than ever before. In scenarios that involve terminating, changing, renewing or extending a “claims-made” medical malpractice insurance policy, there may be a concern to address known as tail malpractice coverage. Tail coverage protects physicians from claims that resulted from care provided during the prior insurance policy period that has since been terminated. Claims-made malpractice policies cover claims associated with only the period that the policy is in effect. So, the policies only provide coverage if the policy is still in place when the incident occurred and when the claim is filed. Tail coverage is usually extended for a defined period of time, such as five years.

Tail coverage may be obtained is several ways including:

• Purchased from the insurer that provided the existing claim-made policy that is going to be canceled or terminated.
• Obtained from another insurer as an independent policy that only covers incidents that occurred during the past policy period
• Purchased as part of a new malpractice policy that you are obtaining
• Some insurers will include this coverage for no additional cost if the physician were to die or become disabled

Often the policy terms will contain requirements such as that the physician remains insured under the policy for a specified time period to receive (qualify) for the benefit. Obtaining the coverage from a new insurer is likely the least costly option.

There are a host of various scenarios that may require a change in a physician’s medical malpractice insurance coverage including:

• Leaving private practice to join the staff of a hospital. Hospital-employed physicians typically have their malpractice coverage provided by the hospital. If their prior coverage was a claims-made policy, consideration may be necessary for tail coverage
• In a merger with another physician practice, it may be best to seek tail coverage from the insurer who will be covering the new group.
• If leaving a group to enter a solo practice, the prior group employer may require the physician to obtain tail coverage. Typically physicians will have already addressed this issue when entering the employment agreement with a group.
• When a physician is retiring from practice, many insurers include tail coverage; however, terms vary based on the policy.

Physicians who are considered employees are usually in the best position when making a change because the employer likely shares in the possible liability from the prior period. Over 90% of larger physician employers do not require the physician to pay for their tail coverage. Tail coverage pricing may vary depending on whether the employer or practice is insured by the carrier or is self-insured. As with most malpractice insurance pricing, those who practice in the specialties that are more likely to face serious claims will pay higher premiums.