Medical Malpractice Insurance Education
Medical Professional Liability Insurance comes in various coverage types, as follows:
An Occurrence policy responds to claims that arise out of damage or injury that took place during the policy period, regardless of when claims are made.
A Claims Made policy responds to claims first made (reported or filed) during the year the policy is in force for any incidents that occur that year or during any previous period during which the insured was covered under a “claims-made” contract. A Retroactive Date is the date whereby Claims Made coverage first begins. Should the policy cancel, you will want to continue the ability to report claims for professional services rendered from the Retroactive Date to the Policy Cancellation date. This is typically called an Extended Reporting Period, also known as a Tail. Claims Made policies are less expensive at the beginning of the policy and gradually increases until the policy becomes mature. Typically for New York, the claims made maturity is eight years. For most other states, the claims made maturity is at the fifth year.
Extended Reporting Period (Tail) Coverage
An Endorsement that can be added to a Claims Made policy whereby the policy will respond to claims for a period of time after a claims-made policy has expired during which a claim may be made and coverage triggered as if the claim had been made during the policy period. Stand alone Tail coverage can also be purchased separately from a different carrier.
A Paid Claims policy that is triggered at the time a claim is paid, rather than at the time a claim is first reported (claims-made policy) or at the time the injury or damage occurs (occurrence policy). This approach can offer significant benefits in terms of pricing accuracy. However, since claims will be paid only while the policy remains active, the insured facing a claim cannot cancel the policy while the claim is pending, often for years, unless he or she is willing to pay the claim out of personal assets. For this reason, we do not typically recommend this policy type.