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Understanding insurance coverage is vital in medical malpractice cases, just as it is in various other types of lawsuits. But what happens if a claim is filed after a healthcare provider's malpractice insurance policy has expired?
Through my extensive experience with medical malpractice cases, I've discovered that knowing whether a provider has additional coverage for claims made after the policy ends is crucial.
In this article, I will delve into the intricacies of what is commonly known as "tail coverage" and explore how it can impact your case. Stay tuned to uncover essential details that could significantly improve your claim management beyond the expiration of an insurance policy.
Quick Summary
- Contrary to a standard policy, tail coverage offers a defense for medical malpractice lawsuits filed after the provider's insurance coverage has already ended or been canceled.
- The policyholder must pay an additional premium to the insurance company for tail coverage insurance.
- Around 30% of healthcare providers face claims after their malpractice insurance policy has ended, emphasizing the necessity of obtaining tail coverage to safeguard against these potential legal issues.
Standard Insurance Policies for Claims
To understand what tail coverage is, you must first comprehend what typical claims-made insurance policies cover in relation to an alleged medical error that serves as the basis for a medical malpractice lawsuit.
ًWhat is Tail Coverage?
Tail coverage is an insurance policy endorsement that enables you to submit a claim against your policy even after it has expired or been canceled. It pertains to insurance policies with a claims-made provision and typically entails paying a surcharge to your insurer [1].
In claims-made policies, you can find liability coverage for things like professional liability, errors and omissions, and directors and officers insurance.
Based on my experience, for occurrence-based policies, free tail coverage is not applicable.
For occurrence-based policies, tail protection is not necessary because occurrence coverage is still available if the insured event took place while the policy was still in effect, even if you later canceled it.
What is Tail Malpractice Coverage?
Tail malpractice coverage is a liability protection insurance policy for doctors that goes beyond any prior medical malpractice insurance claims [2].
Tail malpractice coverage defends doctors when a former patient alleges malpractice while a prior insurance plan covers the doctor.
A claims-made insurance policy limits the insurance company's responsibility to pay medical malpractice to those that are made while you actively practice medicine during the policy's active period.
Former patients may file a medical malpractice claim against you months or even years after the alleged malpractice occurred and far after your effective policy period expires. In these situations, you'll require purchasing tail coverage from the insurance company to shield your liability.
Who Needs Malpractice Tail Coverage?
Individuals who work as general practitioners or surgeons in private practices need malpractice tail coverage. In other words, people in the medical field who are not working as employees of hospitals, medical clinics, or surgical centers.
Certain healthcare professional liability insurance policies provide free tail coverage to retiring doctors who have met certain age requirements and have been customers for a predetermined period of time.
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Why Does One Need Tail Coverage?
One needs tail coverage to avoid liability for medical malpractice claims made against them due to your previous claims-made policy coverage.
There are a variety of reasons you might change plans or discontinue your coverage, including:
- Changing your practice.
- Deciding to work in a hospital instead of a solo or group practice.
- Combining a solo or independent practice with another practice.
- Starting a solo practice after leaving a hospital job or independent group practice.
- Transferring from one hospital or group practice to another.
- Beginning to retire.
However, it would be best if you kept in mind that your claims-made insurance is only valid while you are still employed.
Suppose you are switching jobs or insurance companies but aren't retiring. In that case, you must either carry forward your current retroactive date and buy prior acts coverage or buy an extended reporting endorsement.
Both will give you the protection you require, but prior acts coverage, in my opinion, is usually a less expensive option.
The majority of doctors will eventually receive malpractice tail coverage, either during their careers or after.
By doing this, they will make sure they are protected financially and in terms of their reputation if they are the target of a medical malpractice lawsuit even though they had prior claims-made insurance.
"...Suppose a physician was insured under a claims-made policy prior to hospital employment. In that case, hospitals will often require the physician to purchase tail malpractice coverage to cover any claims that might arise from the physician's prior practice."
- Erik Leander, Chief Technology Officer at a Medical Malpractice Insurance Agency
Cost of Tail Malpractice Insurance
The policyholder is obligated to pay an additional premium for tail coverage. The majority of policies that cover claims-made must offer the doctor the choice to purchase tail coverage to pay claims if and when the policy is canceled.
However, depending on the medical specialization and the region, the tail malpractice insurance cost is between 150 or even 200 percent more than a fully developed claims-made insurance.
To buy tail coverage, you need to do your research before choosing the first choice that comes your way, contact other insurance providers and try to understand more before you purchase tail malpractice coverage.
What Are the Alternatives to Tail Coverage?
The alternatives to tail coverage are "extended reporting" endorsements and "nose coverage."
An extended reporting endorsement, which is a less expensive option than traditional tail coverage, offers extended coverage for claims made after a policy expires.
Nose coverage, on the other hand, covers incidents that occurred before a new policy began, providing similar protection to tail coverage but without the same limitations.
FAQs
How long does malpractice tail coverage last?
Malpractice tail coverage can last from one year after your current plan ends to an unlimited length of time.
Can retired medical professionals benefit from tail coverage?
Yes, retired medical professionals can benefit from tail coverage as it protects them from claims made after they have stopped practicing. This ensures they are not financially vulnerable to past incidents.
Can tail coverage be transferred to a new employer or practice?
Tail coverage itself is not transferable. However, a new employer might offer nose coverage, which covers prior acts and can provide similar protection without needing to purchase separate tail coverage.
Does tail coverage apply to all types of malpractice claims?
Tail coverage typically applies to all types of malpractice claims covered under the original policy, as long as the incidents occurred while the original policy was active.
Do You Have a Medical Malpractice Case?
Tail malpractice coverage is designed to indemnify an insured healthcare provider for a malpractice loss incurred while treating a patient when the treatment was performed with reasonable care, skill and diligence.
If you believe you have a medical malpractice case, you should contact Schmidt & Clark and seek consultation from our experienced medical malpractice attorneys to assess the merits of your claim in a free consultation session.
References:
- https://www.lawinsider.com/dictionary/tail-insurance
- https://www.irmi.com/term/insurance-definitions/tail-coverage