What Do You Need to Know About Malpractice Tail Coverage?

I am officially getting a new employer.  No, I’m not switching actual jobs, just transitioning from an employee of a small, local company to working for a large, national staffing organization.  While I expect my position, salary and benefits will be similar with my new employer, there are a few things I need to have in order for my job transition.  Any time you take on a new NP position you need to pay close attention to your malpractice coverage.

Appropriate malpractice coverage is a must in any nurse practitioner job.  Whenever you sign a contract with a new employer, make certain to take a close look at their malpractice insurance offering.  Most employers supply adequate coverage, but transitions between employers pose a potential problem.  What if a malpractice concern comes up during a lapse in coverage?  What if a patient you cared for years ago while working in a different position decides to sue you?  Will this prior incident be covered under your current insurance or, will you be left to cover legal costs and potential penalties on your own?  

Malpractice tail coverage is the solution to these problems and a must-have for nurse practitioners looking for a new job or thinking about leaving practice.

What is malpractice tail coverage?

Many types of insurance claims are immediate.  When you get in a car accident, for example, you immediately file the claim with your insurance company.  In medicine, however, things are not so clear-cut.  If you deliver a wrong diagnosis, prescribe the wrong medicine or make some other error in your diagnosis and treatment, the damage may not develop for weeks, months, or even years.  For this reason, nurse practitioners need malpractice insurance that offers protection for both the past and present incidents. 

Most medical providers are covered under “claims-made” malpractice policies meaning they only offer protection for claims filed during the time the policy is held and that occurred during the time the policy is held.  This leaves providers legally exposed when patients delay filing lawsuits or during times when they are not currently practicing or make an employment transition.  Malpractice policies known as “tail coverage” offer protection for these times of potential exposure.

Give me an example… 

Say you are covered by a claims-made malpractice insurance policy (the most common type of malpractice coverage).  You quit your job and your policy expires in December, 2012.  Then, a lawsuit is filed against you in January, 2013 by a patient you saw in September, 2012.  Even though the negligent event occurred while you were insured, claims-made policies only cover you while you currently holding the policy, not after the policy has expired or been terminated.  Without a tail-coverage policy, you would be personally responsible for all legal costs and settlements.

Do you need to purchase tail coverage?

If you cancel or terminate a claims-made insurance policy, and your new medical malpractice insurance policy does not include “prior acts” coverage, then you need to purchase tail coverage.  Some malpractice plans will offer protection for prior acts, known as “prior acts” coverage, but many do not.  If you are moving to practice in a different state, you must pay close attention to your new malpractice plan as many plans won’t cover events that occurred in a different state.  So, even if your new plan does include prior acts coverage, be sure it covers prior acts in the state where you practiced.

Many hospitals and other employers require their employees to carry tail coverage for any potential future claims that may arise.  If a tail policy is not purchased, you could be in violation of your hospital’s by-laws.

There are also a few states that require medical providers to carry tail coverage.  in these states, your license could be suspended if you are not appropriately insured.

How much will tail coverage cost me?

Tail coverage can be quite costly, usually 200% to 350% of the cost of your current malpractice premium.  Because these policies are so costly, some insurers have recently began offering policies known as “stand alone tail policies”.  These policies provide less coverage but are also less costly. 

The most important thing you can do when it comes to your malpractice insurance policy is to think ahead.  If you know this will be your last job before retirement or before leaving your practice, you could significantly cut out-of-pocket costs later by asking your employer to include tail coverage as part of your employment contract


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