Tail Insurance in Malpractice Coverage: A Crucial Element for Post-Employment Security

A healthcare professional’s primary focus is providing quality care to patients. However, one critical aspect of professional life that often gets overlooked until too late is tail insurance in malpractice coverage. This insurance can have far-reaching implications for a healthcare professional’s career, financial security, and peace of mind—especially during transitions like job changes or retirement.

Tail insurance, also known as an “extended reporting period” (ERP) endorsement, provides protection for claims filed after a healthcare professional’s malpractice insurance policy has expired. Most malpractice insurance policies, particularly claims-made policies, only cover claims reported while the policy is active. This means that if a claim is made after the policy has ended, even if the incident occurred while a healthcare professional was covered, he or she would not be protected unless tail insurance is in place.

For example, a patient could file a lawsuit months or even years after treatment—well after a change in employers or retirement. Without tail insurance, a healthcare professional could be personally liable for any damages, legal fees and other settlements related to that claim.

Why is Tail Insurance Important for Doctors?

Tail insurance offers long-term protection and safeguards professional and personal finances even after conclusion of a medical professional’s period of practice (altogether or with respect to a particular employer). As lawsuits can be filed several years after a treatment that is ultimately the subject of a claim, tail insurance fills the resulting gap between the end of the permissible reporting period for a claims-made policy (typically expiration or cancellation of the coverage upon the end of the relationship) and the point at which a patient files a claim to which the practitioner’s malpractice insurer would have otherwise responded (generally as to an action during the period of the expired or cancelled policy).

Notably, tail insurance will not protect practitioners for acts that actually occur during the period of tail coverage – the tail policy only provides a reporting tail relating to the now-completed term of the claims-made malpractice policy.

Whose Responsibility is It to Cover the Cost?

One of the most critical aspects of tail insurance is understanding who is responsible for covering the cost. The cost of tail coverage can range from 100% to 300% of annual premium, making it a potentially substantial expense.

Here are the key considerations:

• Before signing any contract, carefully review the terms regarding malpractice insurance including, without limitation, as to length of the tail period. Some employers will include tail insurance as part of their benefit package, while others may require the healthcare professional to purchase it upon leaving the practice.
• Employer-Paid Tail Insurance: Some hospitals, large medical groups, or academic institutions may offer to pay for tail insurance as part of the termination or retirement package.
• Employee-Paid Tail Insurance: In many private practice settings, the healthcare professional may be responsible for purchasing their own tail insurance upon leaving.

Key Takeaways

Tail insurance is not just a box to check at the end of employment. It’s an essential part of safeguarding a career, reputation, and personal finances. For healthcare professionals, particularly those with a long history of patient interactions, the importance of carrying the right coverage long after leaving a practice or profession cannot be overstated.

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