3 Things They Don't Teach You About Physician Liability Coverage in Med School
From the beginning of May, until then end of June, the agents at MyMedicalMalpracticeInsurance.com typically have hundreds of physician liability coverage submissions from physicians just out of residency or fellowship. More often than not, most of these newly trained doctors have not been educated about physician liability insurance, an expense they may have to bear their entire career. Here are three quick points that are rarely discussed in medical school or residency that we see most often:
1. New-to-practice Discount. Physicians just coming out of residency or fellowship are usually surprised to know that the first two years of their physician liability coverage is heavily discounted. Typical discounts in the first year range from 40-60% and typical discounts in the second year range from 20-40%, depending on the insurance company. When discussing rates with new doctors, we are sure to offer them a detailed spreadsheet regarding the rates, and how they will increase from years 1-5. In addition, we highlight the inexpensive cost for the first two years, and warn of a significant increase in cost, going into the third year of coverage.
2. Claims-made vs. Occurrence. The next question most doctors ask us about physician liability coverage is, “What’s the difference between a claims-made and an occurrence policy?” A more detailed definition of these terms (claims-made and occurrence policy) can be found on our website. Briefly, a claims-made policy starts out relatively inexpensively, increases in cost from years 1 to 5, and when you terminate the policy, you may need to purchase a tail. Tails are expensive and cost roughly 2 times the expiring premium. An occurrence policy starts out relatively expensive, remains the same price year to year, and does not require you to purchase a tail if you terminate the policy. (For your reference, about 90% of new physicians go with a claims-made policy.)
3. Tail. A tail policy is purchased to cover the doctor in case a claim is brought against him or her after they have terminated their claims-made coverage. Physicians typically dread purchasing a tail because of its high expense. Most of the time, the incumbent carrier charges 2 times the expiring premium, however, there are stand-alone tail options that can be cheaper. Most tails are lifetime in length. However, there are options for shorter duration tails that can be cheaper. Physicians should be aware of the statute of limitations in their state when purchasing a stand-alone tail.
We hope these tips regarding physician liability coverage have been useful. If you’d like to discuss them in more detail, or if you’d like to receive a quote, feel free to contact us.