Healthcare workers often carry malpractice insurance for years without realizing that the most important protection may be needed after a policy ends. This is especially true with claims-made malpractice insurance, where coverage does not automatically follow you once you change jobs, retire, or switch carriers.
This guide explains how tail coverage works, why it is required in a claims-made malpractice policy, how much it typically costs, and how to avoid common and expensive mistakes.
Quick Summary
- Claims-made policies only cover claims filed while the policy is active
- Once a claims-made policy ends, coverage stops unless tail coverage is in place
- Tail coverage allows claims to be reported after the policy ends
- Occurrence policies do not require tail coverage
- Tail coverage cost is often a multiple of your annual premium
- Planning early can significantly reduce tail exposure
What Is Tail Coverage on a Claims-Made Policy?
Tail coverage, also known as an extended reporting period, allows you to report claims after a claims-made malpractice policy has ended, provided the incident occurred while the policy was active. In simple terms:- The care happened in the past
- The claim is filed in the future
- Tail coverage bridges the gap
Does a Claims-Made Policy Need Tail Coverage?
In most cases, yes. A claims-made policy needs tail coverage when:- You leave an employer that provided claims-made coverage
- You retire from clinical practice
- You switch insurance carriers
- Your policy is canceled or non-renewed
How Tail Coverage Works in a Claims-Made Malpractice Policy
To understand how tail coverage works, you must first understand the trigger of a claims-made policy. A claims-made malpractice policy requires:- The incident occurred after the retroactive date
- The claim is filed while the policy is active
Claims-Made With Tail Coverage vs Occurrence Policy
Claims-Made Policy With Tail Coverage
- Lower premiums in early years
- Tail coverage is required when the policy ends
- The total lifetime cost can be higher if the tail is not planned for
Occurrence Policy
- Higher annual premiums
- No tail coverage required
- Coverage is permanent for each policy year
Buying Tail Coverage After a Claims-Made Policy Ends
Tail coverage is typically purchased:- From the original insurer
- As a one-time, non-cancelable policy
- Within a limited time window after termination
How Much Does Tail Coverage Cost?
Tail coverage cost is one of the most common surprises healthcare workers face. In most cases, tail coverage costs:- 150% to 250% of the final annual premium
- Annual premium: $20,000
- Estimated tail cost: $30,000 to $50,000
Common Tail Coverage Mistakes
Healthcare workers most often run into trouble by:- Assuming the employer pays for tail coverage
- Confusing tail coverage with occurrence coverage
- Waiting until after leaving a job to evaluate options
- Not understanding contract language around insurance obligations
How Tail Coverage Fits Into a Long-Term Insurance Strategy
Tail coverage should never be treated as a last-minute add-on. It should be part of a broader malpractice insurance strategy that considers:- Career stage
- Job mobility
- Retirement plans
- Risk tolerance
- Policy structure
Frequently Asked Questions (FAQs)
1. What is tail coverage on a claims-made policy?
It allows claims to be reported after a claims-made policy ends for care provided while the policy was active.
2. Does a claims-made policy always need tail coverage?
Yes, if the policy ends and no replacement coverage preserves the retroactive date.
3. Can I buy tail coverage after leaving a job?
Usually yes, but only within a limited window. Waiting too long can eliminate the option.
4. How much does tail coverage cost?
Typically, 150% to 250% of the final annual premium, depending on specialty and risk.
5. Is tail coverage the same as occurrence coverage?
No. Occurrence coverage does not require tail coverage because claims are covered based on when the care occurred.
A Smarter Way to Handle Tail Coverage
Tail coverage decisions can affect you long after a job ends. Small oversights today can lead to large financial exposure years later.
PLI Consultants works with healthcare professionals to:
- Evaluate claims-made malpractice policies
- Identify tail coverage obligations before transitions
- Compare cost-effective tail and alternative options
- Avoid overpaying for unnecessary coverage
Whether you are changing jobs, negotiating a contract, or planning retirement, understanding how tail coverage works before coverage ends gives you leverage and peace of mind.
If you want an objective, no-pressure review of your malpractice insurance and tail exposure, a conversation with PLI Consultants can help you make informed decisions before deadlines close.
