Risk Strategies: A Specialist Approach to Medical Malpractice Insurance
I would like to introduce my friend Christian Amabile who is a malpractice insurance broker. He can get you the best prices and highest quality plan through his vast network of resources.
I asked him to provide our members with a post talking about how you can wrap up your malpractice insurance plan if you are leaving an employed position and heading into contracting work. I good example of this would be a transition from traditional employment to employment lite.
Leaving an employed position can seem like a daunting task, but SimpliMD has streamlined the process and utilizes partners that help make becoming a 1099 worker easy. Christian Amabile from the medical malpractice insurance team at Risk Strategies has some insights below on what to keep in mind when leaving an employed position:
Take it away Christian:
The largest consideration regarding medical malpractice insurance when leaving an employed position, is tail coverage or continuation of coverage. Most organizations have medical malpractice insurance policies written on a “claims-made basis”. I will not get into the intricacies of claims-made coverage at this time, but the most important thing to keep in mind is that if a claims-made policy is canceled without purchasing a tail or having a new policy cover your “prior acts”, there would be no coverage in place for the entire period you were insured under that claims-made policy.
Depending on your agreement with your employer, there are several ways to make sure that coverage remains active and to prevent any gaps in coverage. It is important that you look over your contract, have a conversation with your employer, and speak with us, to make sure that this is handled in a way that makes the most sense for you.
The most common scenarios are the following:
Scenario 1: Your employer purchases or provides a tail for you.
This is the optimal situation for physicians, and it typically has a significant cost to the employer. Due to the cost associated with tails, deals like this are usually made during hiring negotiations.
If you are receiving a tail from your employer, I would recommend making sure that it has an unlimited term (does not expire), it is coming from a financially secure carrier and has limits that are standard in your state or higher.
Scenario 2: You are left as a named insured on your employer’s group policy.
This is the most common situation when leaving a large employer, as most large organizations write physicians on group medical malpractice insurance policies or through captives.
In this case, no tail needs to be purchased, as the employer keeps you as a named insured on their policy for the dates you were employed there, to cover claims that may arise from that period.
The only downside is if that employer were to go out of business, the policy would be canceled, and thus no coverage would be in place. You would likely then be responsible for purchasing a policy to cover that period.
Scenario 3: You keep coverage active by purchasing a new claims-made policy that covers your prior acts.
Typically, when a physician switches from one carrier to another and is insured on a claims-made basis, that new carrier covers the physician’s “prior acts”. Meaning, that the new carrier is now responsible for covering the physician back to the first date that the physician was insured on a claims-made policy. This is why tails are not usually needed when a physician switches carriers for better pricing, etc.
Unfortunately, many organizations will not allow you to do this when leaving an employed position. The reason is, that if you were to cancel your new policy anytime in the future (without purchasing a tail or obtaining another new policy to cover your prior acts), there would then be no coverage in place for the time you were employed there. The prior employer would also have no real way of knowing that the coverage is no longer active. Employers avoid taking this risk by making you fall out of the policy at the time you leave.
Scenario 4: You are responsible for purchasing your own tail.
The downside here is that tails can be expensive. Tails can cost over 2x your annual premium, which depending on your specialty and location, can be very costly.
When a medical malpractice insurance policy is cancelled, your carrier at the time of cancellation must send you a tail offer. You can also shop for standalone tail coverage with other carriers for possible better pricing.
Maintaining the correct coverage without any gaps is extremely important for physicians and the health of their practice. SimpliMD and Risk Strategies will help guide you through this process and will make sure your insurance is set up in the best and most cost-effective manner possible. Feel free to reach out to me anytime with questions!
This is Tod popping back in, and I love this post from Christian and I hope you find it helpful!
You can contact Christian here for a free quote or if you have any questions.
You can also go to our SimpliMD landing page for more information about quotes from Christian and Risk Strategies.