Written by Stephen Lim Lic#0M66738
Physicians and healthcare professionals who are required to carry medical malpractice insurance can obtain coverage in various ways with specific ramifications for each decision.
Medical Malpractice Insurance can either be provided by the employer or purchased directly by the physician or healthcare provider. We will outline some of the benefits and drawbacks of obtaining coverage through your employer or coverage individually.
Typically, an employer who provides coverage has a medical malpractice insurance policy that is rated for groups, which means that providers come and go and are scheduled onto the policy. With this, coverage is provided by scheduling a provider with their own effective date and retroactive date (assuming it’s a claims- made policy). There are some ramifications to this as tail coverage will typically be offered and in-force, as long as the current policy stays in place, or a new policy maintaining the group’s retroactive date is purchased. To fully protect yourself from any deviations maintaining coverage by the incumbent employer, the provider should look into getting tail coverage. Tail coverage can either be purchased by the current carrier or a new carrier.
Healthcare providers should also recognize that coverage typically offered by an employer cannot be extended for moonlighting services or any outside ventures the provider may want to be involved in.
When a provider decides to get their own coverage, this offers more flexibility to the provider and the responsibility of maintaining their own coverage. Providers will want to seek out a brokerage, such as California Attending Physicians Insurance Agency, to provide a comprehensive search of the medical malpractice insurance marketplace and management of your policy.
When a policy is secured, this usually offers the freedom for the provider to work at multiple locations under their specialty-rated policy. They also have the flexibility of switching carriers at renewal while maintaining their retroactive dates (assuming it’s a claims-made policy) to ensure prior acts are still covered. When the provider decides to discontinue the practice and request the policy be canceled, the provider would be responsible for the tail coverage.
There are two sides to the coin. With one, the provider does not need to worry about maintaining and securing coverage; however, it lacks the freedom to work at other practices. The other side provides the flexibility of the provider to work at multiple locations but also makes the provider responsible for the policy. Depending on certain circumstances, providers may get two policies to cover exposures with an employer and with exposures independently practicing.
Sometimes the employer will give you the option of either purchasing coverage through them or providing the coverage individually. One thing you should be aware of is, if you purchase the coverage through the employer, will the tail coverage be offered also? This is a big consideration to factor in the cost of exiting that employer. There are some other options, such as obtaining coverage individually, which would make you responsible for the tail coverage if you decide to cancel the policy. If you decide to continue to maintain your coverage, tail coverage would not be needed.
Medical malpractice policies, specifically a claims-made policy, can be tricky as it doesn’t cover prior acts once the policy is canceled. You can avoid this by maintaining your retroactive date with no gaps in coverage, or getting tail coverage. Ultimately, this means if you decide to get coverage individually, you should be prepared to keep the coverage for the long haul. And vice versa, if you plan on working for employers the rest of your career, ensure tail coverage is offered when exiting that position.
