Most medical liability insurance policies are claims-made policies. This means that a physician is afforded coverage for claims made and reported while the policy is in force. In addition, the alleged act, error, or omission upon which the claim is based had to occur after the policy’s retroactive date, usually the inception date of the first claims-made policy purchased, as long as there has not been a gap in coverage.
Tail coverage protects the physician going forward. It provides protection against unknown claims at the end of the policy period.
Purchasing stand-alone tail insurance is an excellent way for orthopaedic practices to save money and protect the assets of the covered physicians. Fortunately, many options for coverage are available—including the AAOS Member Insurance Program.
The following scenarios are instances in which an orthopaedic surgeon might require tail
- A physician leaves a group or closes a private practice to become employed by another group or hospital
- A group practice merges with another group or is acquired by a hospital
- A group practice is contractually obligated to purchase tail coverage for a departing physician
- A new physician is being recruited, and the analysis of his or her employment includes whether to “tail out” prior acts of the physician or to provide coverage for the prior acts
Some carriers offer free tail coverage if a physician has been covered by their claims-made policy for a specific number of years or is completely retiring from the practice of medicine. Today, however, it is more likely that the physician is moving from one employment situation to another, and therein lies the rub. Tail coverage is a one-time, due-upon-demand payment. That means that unless the hospital or new group is willing to cover this cost, the physician is stuck with the cost, which may range from $50,000 to more than $250,000, depending on the state in which the physician practices.
Until recently, physicians had few options other than to purchase the coverage from their existing carrier. Today, some carriers are offering stand-alone coverages that cost less than the tail coverage from the existing carrier. Stand-alone policies can reduce the tail premium as much as 30 percent. Premiums are based on the time frame for the coverage—anywhere from 1 year to unlimited—and on other underwriting criteria.
Stand-alone policies can also be used in circumstances in which a practice is being sold or closed and may have ongoing exposure to prior liabilities.
For more information on stand-alone tail insurance, visit www.aaosinsurance.com
Randy Cupp is an AAOS Member Insurance Program representative. He can be reached at 855-465-0197 or Randy.Cupp@PealInsurance.com