Medical professionals need to know a lot about medical malpractice insurance. From the many clauses to types of coverage, it can confuse those unfamiliar. Tail coverage can be an especially difficult area to understand. Below, we explain tail coverage for malpractice insurance and investigate whether you should have it.
What Is Tail Coverage?
Before we get into the pros and cons of tail coverage for medical professionals, we should ask ourselves, “What does tail coverage for malpractice insurance mean?” Tail coverage is add-on coverage for a malpractice policy which protects the insured when a policy expires or is deactivated because they are switching to a different provider.
Tail coverage is for claims-made malpractice policies. It extends the coverage of the expired policy to any gaps in coverage that could occur due to retirement or from the old policy expiring to the new policy starting. In a claims-made policy, the insurance provider only covers claims received while the policy was active, but tail coverage extends the insurer’s obligation to any gaps in coverage for the insured. There are a few different types of tail coverage. For most medical professionals, there’s just one standard kind that extends their existing policy.
Do I Need Tail Coverage?
Whether you should have tail coverage for your malpractice insurance depends on the situation’s specifics and the individual. Tail coverage is like a stop-gap for those in transition, whether from one firm to another or from working to retirement.
Examples of when a medical professional may need tail coverage include:
- Changing practices
- Leaving a practice for a hospital
- Leaving a hospital for a practice
- Switching from one hospital to another
- Entering retirement
If your career is in any of these situations, tail coverage would be wise to ensure that you’re not left exposed to any malpractice claims during the insurance coverage transition.
How Much Does Tail Coverage Cost?
How much the tail coverage will cost will depend on various factors, like the insurance provider, the insured, how long they’ve worked, previous malpractice claims, and more. Typically, the standard rate for tail coverage is roughly twice the annual premium of the expiring claims-made policy.
So, if your annual premium for your previous claim were $10,000, the tail coverage to extend it would be roughly $20,000. Some plans may be more, some less. While it may seem steep, it’s typically better than the alternative.
Are There Alternatives to Tail Coverage?
What are the alternatives if you don’t want to pay for tail coverage? One alternative is to go bare—the term for not having any malpractice insurance for certain periods, which is much more affordable but much more risky as the individual would have to fend for themselves if they’re hit with a claim.
The other option is prior acts coverage, which protects the insured against claims made on insurance events before a new policy’s purchase. This option is like buying a new policy and paying more for retroactive coverage. Instead of extending an expired policy, the insured is extending their new policy.
