Tail Coverage in Medical Malpractice Insurance Policies
Sometimes a plaintiff in a medical malpractice claim brings the case years after the malpractice has occurred. This may be permitted under the statute of limitations, especially if the state uses a discovery rule that can extend the limitations period. However, a plaintiff may face challenges in being compensated through the doctor’s insurance coverage if their policy expired or was canceled before the claim was filed.
Tail coverage is meant to address this problem by providing coverage for medical malpractice claims made after an insurance policy has ended. It differs from typical medical malpractice insurance policies, which are known as claims-made policies. These policies require the claim to be brought while the policy remains in effect. (The incident of malpractice also must have occurred within the policy period to be covered under most standard claims-made policies.)
How Tail Coverage Works
If a doctor commits malpractice toward the end of their policy period, the patient may not discover the malpractice until after the coverage has ended. The doctor meanwhile may have a new insurance policy, but this new insurance likely does not cover incidents of malpractice that occurred before the policy started. As a result, the doctor technically is uninsured for the purposes of this claim, which means that a plaintiff may struggle to collect all of their damages. They can try to collect from a doctor’s personal assets, but these may not be enough to cover the costs associated with their injuries if they are serious.
Benefits of Tail Coverage
Both medical professionals and patients benefit from tail coverage. Tail coverage protects a medical professional’s personal assets from any judgment against them and provides patients with a more certain avenue to collect judgments in their favor.
Tail coverage fills this gap as long as the incident of malpractice occurred during the original policy period. It does not provide coverage for incidents of malpractice that occurred while the doctor was covered only by tail coverage. Sometimes a tail coverage policy will provide a lower limit of liability than the original policy did. It generally has an unlimited term, but sometimes an insurer offers limited term coverage for a lower cost.
Doctors must pay an additional premium to get tail coverage, but this option is typically offered with standard policies. While the premium may cost much more than the premiums for the standard policy, it is usually a smart decision to purchase tail coverage so that the doctor does not put their personal assets at risk. The doctor may be able to spread the tail coverage premium over multiple payments or categorize it as business expenses for tax purposes. If doctors are working as a group, they may split the cost of the tail coverage premium among them.
Alternatives to Tail Coverage
Nose Coverage = coverage under a medical professional’s new insurance policy for prior acts of medical malpractice
If a doctor is hoping to save money, they can consider purchasing limited term tail coverage, as long as they are allowed to purchase this coverage by any group to which they belong. They also may be able to purchase an extended reporting endorsement to cut costs. The main alternative to tail coverage is known as nose coverage. This coverage is attached to the doctor’s new insurance policy. It is the opposite of tail coverage in the sense that it covers claims that were filed during the period of the new policy, even if the incident of malpractice occurred before the new policy started. Not all doctors can purchase nose coverage, especially if they have a history of malpractice claims against them or if malpractice claims are common in their region. If a doctor previously practiced in a different medical group, they may not be able to get nose coverage because the new insurer may not want to coordinate a defense with the prior group’s insurer if it is different.