Financing Medical Malpractice Tail Coverage

What is tail coverage? If you’re a medical student, resident, or practicing physician, you should get to know the ins and outs of malpractice insurance, as it could matter your career. Here’s a scenario where a healthcare practitioner might need it:

“[Imagine] a physician is insured on a Claims-Made policy with prior acts coverage dating back to January 1, 2000. The policy expired on December 31, 2010. A medical negligence complaint or lawsuit is filed against the physician in September, 2011 related to surgery performed in November, 2010. Without an extended reporting endorsement or stand-alone tail policy in place there would be no coverage for this or any other claim(s) asserted after the expiration date of the prior policy. If an extended reporting endorsement or stand-alone tail policy was purchased the tail coverage would be in effect as of December 31, 2010. Properly structured, the policy would cover “prior acts” dating to January 1, 2000 and the policy would respond to this alleged negligence.” – The Student Doctor Network

Furthermore, when a physician or resident changes workplaces, they should understand their current policy, including when it expires. Unless they have something directly lined up with their next employer after expiration, there might be a ‘gap’ period without insurance. That’s where tail coverage comes in.

In some cases, a new employer will offer the resident or doctor coverage of this period, once they’ve started their new job. If you’re currently looking for a job and might need tail coverage, don’t hesitate to bring this up in the interview as a potential benefit—it could pay off in your favor. Whatever the case, these ‘gap’ periods shouldn’t be underestimated financially.

Tail coverage is typically one premium payment. A personal loan could come in handy to purchase coverage and extend malpractice insurance in these kinds of situations.  If you determine it is necessary, Laurel Road offers loan products for up to $45,000 for residents, and up to $80,000 for physicians, providing liquidity and allowing for often high short-term expenses, to be paid off gradually over time.

Don’t let yourself be shocked by ‘gaps’ in insurance coverage—it can happen more easily than you think. There are multiple levers to pull that can get you covered without breaking the bank, and hopefully you’ll now be armed to tackle the issue head on.

In providing this information, neither Laurel Road or KeyBank nor its affiliates are acting as your agent or is offering any tax, financial, accounting, or legal advice.  If you need to determine whether to purchase insurance, please seek advice from an expert in matters of professional liability coverage.  Laurel Road does not provide advice or recommendations regarding insurance products.  No marketing materials on our website should be construed as providing advice or otherwise taking a view on any matter or issue relating to professional liability coverage.  

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