How physicians can obtain cost-effective medical malpractice tail insurance

Posted by | March 06, 2014 | No Comments

Purchasing a tail insurance policy can prove to be a burden to healthcare providers when retiring, changing employers or under other circumstances which might require the termination of a claims-made policy.  Gone are the days when the only options were to “go bare” or purchase tail insurance for the significant premium offered by the incumbent carrier.   Diederich Healthcare equips physicians with multiple options for standalone tail insurance policies.

Extended reporting period (better known as “tail”) insurance covers a prior acts period (aka “retroactive period”) when a claims-made policy will cease to remain in force.  It allows the insured physician to continue to maintain liability protection beyond the term of the policy, as a claim may arise for alleged negligence during the prior acts period.  Physicians may need to obtain tail when joining a new group, leaving private practice, moving to a new state, or upon retirement.

Although every situation is unique, this example depicts a common scenario:

  1. Dr. Smith, a solo practice Ob/Gyn has claims-made coverage with Acme Insurance Company with a 7/1/1999 retroactive date and he pays $40,000 per year.
  2. Dr. Smith decides to join a group that will provide malpractice for him.
  3. Dr. Smith informs Acme Insurance Company that he no longer needs coverage and requests a tail quote.
  4. Acme Insurance provides an offer of tail coverage for $80,000.
  5. Dr. Smith calls Diederich Healthcare and gets an extended reporting period quote for the same coverage for $60,000 from an “A” rated carrier.
  6. Dr. Smith realized a $20,000 savings because he obtained stand alone tail through Diederich Healthcare.  He is now covered for any future claims which may arise from incidents that occurred between 7/1/1999 and the date the tail policy went into effect.

As illustrated in the example above, incumbent carriers often offer coverage at 200% of the expiring premium.  In most cases, coverage is consistent with the current policy and many doctors prefer the security of an unlimited reporting period.  In addition to unlimited tail options, Diederich Healthcare can help tailor a program to a specific risk level with a “limited tail” that has a shortened reporting period of between and 1 and 5 years.  A “limited tail” can even further reduce the premium below that of an indefinite or “unlimited tail.”

Physicians often find themselves asking “What about free tail?”  Many admitted carriers will offer free tail coverage in the event of:  (1) death, (2) disability, or (3) retirement from medical practice after meeting specific carrier requirements for length of time insured.  If these free tail coverage conditions cannot be met, the help of an experienced medical malpractice insurance specialist can save you significant time and money.

For a custom tail insurance analysis, complete our no-obligation tail quote form or call 800-457-7790.

To contact the author, call 800-457-7790 and ask for Max Schloemann.

About Max Schloemann (view full bio page)

Max Schloemann is an experienced broker who provides cost-effective, high quality risk solutions for physicians and medical practices of all sizes. His extensive knowledge of medical professional liability insurance and passion for helping people make him a great resource for his clients. As a licensed agent in multiple states, Max can assist doctors with all medical malpractice insurance matters including issues such as tail, claims-made versus occurrence coverage, transitioning to a new practice, and many more. “Open communication between physicians and their broker allows for strong relationships, mutual understanding, and ultimately ease of doing business. My clients tell me it’s reassuring to be able to reach me by call, text, or e-mail both day and night.” Max joined Diederich Healthcare in 2008 as a medical professional liability insurance broker. A magna cum laude graduate and “Outstanding Senior” of Southern Illinois University’s College of Business, Max has held various sales and managerial roles with State Farm Insurance and has served as insurance risk manager for a major university system, including its Medical and Dental Schools. Max enjoys spending time with his wife Kristen, a cardiovascular PA-C, and their two sons (Charlie and Benjamin). He coaches youth baseball, soccer, and basketball teams, donates his time and blood to the American Red Cross, and participates in other charitable programs.

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