What is Tail insurance and do I need it?
Tail insurance, also known as an extended reporting period endorsement (ERPE), is a type of insurance that provides coverage for claims that are made against a person or business after their regular insurance policy has expired.
When a healthcare professional retires or changes jobs, their medical malpractice insurance policy typically expires. However, claims related to medical malpractice can take years to surface, and the healthcare professional may still be at risk for a claim even after they have stopped practicing. Medical tail insurance provides coverage for claims that arise after the healthcare professional’s regular policy has expired. Tail insurance is typically purchased as an add-on to a regular insurance policy and can be useful in industries where lawsuits can take years to materialize.
Medical tail insurance is usually purchased as an endorsement to the healthcare professional’s regular medical malpractice insurance policy, and it can provide coverage for a specified period of time, such as one, three, five, or even ten years. The coverage limits of the tail policy may differ from the regular policy and can be customized to meet the healthcare professional’s needs.
So do you actually need it? If your medical malpractice insurance is a “claims made” policy, the answer is yes. Claims made malpractice insurance is a type of professional liability insurance that provides coverage for claims that are made against a professional during the policy period.
Unlike occurrence-based insurance policies that provide coverage for claims that occur during the policy period, claims made policies provide coverage only for claims that are made and reported to the insurance company while the policy is still in force. This means that if a claim is made against a professional after the policy has expired, they will not be covered unless they have purchased a tail insurance policy, which extends the reporting period for claims.
One of the benefits of claims made malpractice insurance is that it typically has lower premiums than occurrence-based policies, which can be attractive to professionals who are just starting their careers. However, it is important to note that claims made policies can be complex, and professionals should be aware of the potential gaps in coverage that may arise when transitioning from one claims made policy to another or from a claims made policy to an occurrence-based policy.
To ensure adequate coverage, professionals should carefully consider the terms and conditions of the policy and consult with an attorney who has experience with malpractice insurance in physician contracts. Medical tail insurance can provide peace of mind for healthcare professionals who have retired or left their medical practice, as it can protect them from unexpected claims that may arise in the future.