Stand Alone Tail Insurance: What Physicians Need to Know and When to Consider Getting a Policy
- Nisha Mehta, MD
- 2 hours ago
- 6 min read
Malpractice claims can come years after a patient encounter, leaving a long “tail” of exposure to liability for physicians. If a doctor still works for the same employer that they worked for in the incident of concern, this is less of an issue as they’re likely covered under their current policy. Additionally, if the policy they held during the time the incident occurred was an occurrence based policy, the policy will continue to cover any lawsuits that may be filed even after they leave that employer. However, issues can arise with claims-based malpractice coverage if a physician changes jobs or insurers between the patient encounter and when the claim is filed. Tail insurance or nose insurance is often paired with claims-made coverage to offer comprehensive coverage. Depending on the current coverage you have in place, you may need to shop around for a stand alone tail policy. Below, we cover when physicians may need a stand alone tail (SAT) policy, what to know when shopping for a SAT policy, and where to find a policy if you need one.
Some of the information for this article has been derived from our medical malpractice insurance & tail coverage primer and was originally contributed by Jason P. Shah, MD, a physician who now specializes in this area and is Managing Partner of the Alera HCL Team, whom we have partnered with to provide resources for malpractice insurance.
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Why physicians need additional coverage with claims-made malpractice insurance policies
There are two basic types of medical professional liability (malpractice) insurance policies: occurrence and claims made. Occurrence based coverage covers all incidents that happened while covered under the policy, regardless of when a suit is brought about. This is the type of insurance typically provided in residency and fellowship, which is likely why you didn’t need to worry about buying a tail insurance policy when you finished training.
Claims-based coverage only covers you from claims filed while you hold the policy. If someone files a lawsuit after you leave a job or change policies to another carrier, the policy no longer covers you, even if the incident occurred while you were covered. You need additional insurance to cover you from claims in these instances. This comes in two forms: coverage for prior acts through “nose” insurance or coverage from claims that come after the end of a policy, known as tail insurance.
What is tail insurance?
Tail insurance, also called extended reporting period (ERP) coverage, is a type of malpractice insurance that covers costs for incidents reported after a claims-made malpractice policy is no longer in effect. Tail insurance can be offered by the same malpractice carrier as the claim-made malpractice policy it wraps around, or purchased separately through another carrier.
Stand-alone tail (SAT) coverage is a policy that offers separate limits of liability at the cancellation or expiration of an independent claims-made malpractice policy.
Options for physicians with claims-made malpractice insurance policies
There are a few options that offer physicians protection for claims filed after a claims-made policy is cancelled or expires:
An endorsement on an existing policy, known as a tail endorsement
A stand-alone tail (SAT) policy
Moving to a new malpractice insurance policy that provides nose coverage (in this instance, you may still have tail liability to address in the future)
When do doctors need to purchase a stand-alone tail insurance policy?
Tail insurance can be offered by employers as part of their employee benefits package, but practices and institutions don’t always offer it, so it’s important to negotiate into the termination clause of your physician employment contract if possible as it can be quite expensive. If tail insurance is not provided in your contract, a stand-alone tail policy may be needed.
Common situations why physicians have to consider a SAT policy are as follows:
You leave a job with a claims-made malpractice policy: If your employer provides claims-made coverage but does not include tail coverage, you will likely need a stand-alone tail policy that protects you after you leave. This includes if you decide to leave clinical practice, even for retirement.
You switch policies between insurers: Some policies offer “nose” coverage for prior acts, but not all do. If you switch to a new policy that doesn’t include nose coverage, you will need tail coverage for the canceled policy.
You work locums and aren’t provided tail coverage: Locum tenens physicians often move frequently between jobs and contracts. If the institution(s) you contract with directly or the locums staffing agency you work with doesn’t offer tail coverage with a claims-made policy, or you have your own policy that doesn’t include tail insurance, you may need a a stand-alone tail policy. Again, make sure you negotiate this in your locums contract if possible.
Considerations when getting stand-alone tail insurance policies
Stand-alone tail policies have associated taxes and fees that can add significant cost to policies. You also have to pay in one upfront installment, which can be very large and thus cost prohibitive. Stand-alone tail policies thus may not be the best option if you have others available.
Before shopping for a stand-alone tail policy, you check your employment agreement to see if you’re already covered under your employer’s plan, or see if your new employer is willing to pay for nose coverage.
If you’re a private practice owner and shopping policies for your practice, consider securing a malpractice policy that includes an ERP endorsement versus purchasing a stand-alone policy. The ERP is an optional coverage extension for a claims-made policy which allows the insured party an additional period of time within which they are able to report claims to the insurer arising from prior wrongful acts. Generally, if an ERP quote is less than $25,000, it is likely the better and more economic option versus a stand-alone policy.
How do I shop for a stand-alone tail insurance policy to purchase?
An insurance broker can you help explore options if you’re in a situation where:
You need tail insurance
It isn’t provided to you by an employer -and-
You cannot find a better option through an ERP endorsement for a policy you’re establishing or covered under
Our partners at Alera Group are brokers that can help. Jason Shah (Jason.Shah@aleragroup.com) is a physician who started a malpractice company, now under the umbrella of the Alera group. He has helped quite a few members of the group with malpractice and tail insurance. He and his team can help physicians when their ERP quote is greater than $25,000 and they are exploring options for stand-alone policies. Please mention that you're coming from PSG if you reach out.
When reaching out to Alera or another insurance broker, we recommend having your employment agreement provisions regarding malpractice/tail insurance or claims-based policy for your practice ready for review so they can ensure proposed policies are compliant with your existing coverage.
What information will you need to have when applying for stand alone tail (SAT) coverage?
Additional information you will want handy when applying for SAT includes:
Start date and end date of retroactive period that is needed to be covered by tail
Details of your practice: location, full-time/part-time status, etc. (if OB, provide the average number of deliveries)
Your CV
Current policy certificate of insurance
Claims history report from current carrier (and if applicable, prior carriers)
Current carrier ERP endorsement quote
Conclusion
Tail insurance is a necessary part of asset protection and risk management planning for physicians with claim-based malpractice insurance coverage. If you change jobs, establish your own practice, or leave clinical medicine, you may need to consider a stand-alone tail policy to protect you from claims in the future that could carry large financial risks. Never assume tail insurance is provided. Always check with current and prospective employers about the details of their malpractice coverage, and make sure you get a copy of the insurance certificate as part of your checklist when leaving a physician job.
Additional malpractice resources for physicians
Explore related PSG resources: