How Much Does Tail Insurance Cost for a Physician?
Tail Insurance, also known as Extended Reporting Period coverage, must be purchased when a physician has claims-made professional liability insurance coverage. How Much Does Tail Insurance Cost for a Physician? Tail insurance covers the gap between when a physician leaves an employer and when the statute of limitations on filing a medical malpractice claim ends.
Malpractice coverage is professional liability coverage that helps protect physicians and other medical professionals from the financial risks associated with lawsuits in which patients believe they were harmed due to an incident involving medical care. The coverage depends on how much the policy is worth (premium) and your specialty – personal injury attorneys are more likely to take cases against physicians working in hospitals than those who practice family medicine or internal medicine in private practice.
Understanding Tail Insurance in Medical Practice
Tail insurance, an essential aspect of a physician’s career, covers malpractice claims after a policy ends. This section delves into the specifics of tail malpractice insurance and its importance for medical professionals.
What is Tail Coverage Malpractice Insurance?
- Definition and Purpose: Tail coverage malpractice refers to an insurance policy that covers incidents that occurred during the active period of a previous malpractice policy but were reported after its termination.
- Importance for Physicians: Understanding the need for malpractice tail coverage is crucial, especially when changing jobs or retiring, to protect against late-reported claims.
Cost Considerations of Tail Coverage
- Determining the Cost: The cost of tail coverage can vary significantly based on factors like specialty, geographic location, and the length of the coverage period.
- Budgeting for Tail Insurance: Knowing how much does tail coverage cost is important for financial planning. Physicians should inquire about malpractice tail coverage cost early in their career planning.
How to Obtain Tail Coverage
- Getting a Quote: Physicians can request a malpractice tail coverage quote from insurance providers to understand the tail insurance cost and coverage details.
- Comparing Options: It’s advisable to compare different policies to find the most suitable tail coverage in terms of cost and coverage extent.
Evaluating the Need for Tail Insurance
- Assessing Risk: Physicians should assess their risk and the likelihood of late-reported claims to determine the necessity and extent of tail coverage.
- Consulting Experts: Seeking advice from a medical malpractice attorney or insurance specialist can provide clarity on whether tail insurance is a prudent investment.
Many Policy Options
Most malpractice insurance carriers provide coverage with a deductible clause ranging between $0 -$100k per incident, with most doctors opting for higher deductibles due to lower premiums. A deductible clause in a malpractice policy stipulates that the insurance company will not cover any expenses incurred by the insured for injuries or damages up to an agreed-upon amount. A deductible clause in a malpractice policy stipulates that the insurance company will not cover any expenses incurred by the insured for injuries or damages up to an agreed-upon amount per incident. The typical company\’s deductible is usually $5000, but it can be higher, sometimes as high as $50,000, depending on individual state requirements and insurance claims history.
How Much Does Tail Insurance Cost?
A good rule of thumb is that tail insurance costs around two times your annual medical malpractice insurance premium. Thus, if your annual premium costs $6000, your tail cost would be around $12,000. Your tail insurance cost is a one-time payment, not an annual cost.
The cost of insurance coverage is based on the claims history of the provider and the number of individual and group patients seen per year. Providers with high annual visit counts will have a lower insurance premium since their claims are spread over more people. Thus, the choice of claims made or occurrence is essential.
Additionally, doctors who perform below average in terms of malpractice insurance claims will pay less than doctors who incur higher claim rates. A provider\’s business risk profile is also considered when determining the rate an insurance company will charge for the occurrence-based policy. Provider age is also factored into the equation, as younger doctors are at higher risk than older practitioners of committing acts that could lead to liability or making an error.
Who Does Pay for Tail Malpractice Insurance?
The physician’s employment agreement will specify whether the physician or the employer pays for the tail insurance. It is a point of contention in many employment agreement negotiations, with resources from both parties advocating for their position. Here is an article that offers guidance on negotiating a physician employment contract.
Claims-made coverage is used in cases where there may be periods when coverage is not available, such as physicians changing jobs. In these situations, the tail policy will protect for up to three years after leaving an employer. The tail policy also has other limitations and exclusions, making it difficult for physicians who leave employers often or have a history of high liability claims against them to find affordable malpractice insurance.
As with any insurance, you must understand what your tail covers before purchasing one. There are two types of tails – open and closed – each with benefits and drawbacks.
Length of Practice Matters
One of the essential factors in determining how much you will pay for your tail insurance is how long you have been practicing medicine. If you are starting, your rates could be lower than someone practicing for over ten years.
Solo vs. Multi-Physician Practice
The final factor determining how much your tail insurance costs is the type of practice you have. If you work in a solo practice, your rates will be higher than if you work with another physician or as part of a clinic where there is coverage and indemnity for each other’s errors. You may visit the American Medical Association website for more information about medical malpractice insurance.
If you have questions about your current medical malpractice policy or want your employment agreement reviewed, contact Chelle Law today.
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