Last Updated: Nov 28, 2023

As a practicing physician, you are likely to encounter a malpractice suit at some point in your career. Even if you are extremely careful, things happen, and sometimes they are outside of your control. In these situations, it is crucial to have adequate malpractice insurance coverage. Malpractice insurance is usually paid for by your employer, and the types of coverage are fairly straightforward. However, you should still understand the coverage available to you and make sure it offers comprehensive protection. If not, you may want to negotiate the coverage offered in your employment contract or look for additional coverage elsewhere.

Available coverage types

Your employer is likely to provide one of two types of malpractice coverage: claims-made or occurrence-based. These two coverage types have some key differences which will determine whether you have coverage for certain incidents or not.

With a claims-made policy, you will only be covered if the policy is active both when an alleged incident occurs and when the claim for that incident is filed. This means that you will no longer have coverage for past events once you have left your job and changed insurance policies or retired.

Occurrence-based policies have more longevity. They provide coverage for incidents which occurred while the policy was active, even if the claim is not filed until after the policy has ended. In this case, you essentially have indefinite coverage for events that took place while your policy was active, regardless of whether you have moved on from that job and changed insurance policies.

The benefits and drawbacks of each type of coverage

You may have already guessed that most physicians prefer occurrence-based coverage. The ongoing protection provided by these policies is simply a safer option for most. Although, whether you end up with occurrence-based coverage is largely up to what your employer offers, and there are still a few drawbacks to each type of policy.

As already mentioned, occurrence-based policies provide coverage even if you need to make a claim after the policy has ended. This is a huge upside, since you could easily be sued for an alleged medical error that happened years ago while you were still under the policy. The main drawback to occurrence-based polices is the higher initial premiums. Because occurrence-based coverage can be more expensive, many younger physicians who are trying to pay off debt will be drawn toward claims-made coverage instead.

If you have a claims-made policy, you mostly benefit from the lower initial premiums. However, with the lower costs comes a potential lack of coverage in the future. After the claims-made policy has ended, you will no longer be protected for incidents that took place while it was active. As a general rule, the savings are not worth the risk but if you are offered a claims-made policy, it is highly recommended that you investigate tail coverage.

Tail coverage and why you might need it

In simple terms, malpractice tail coverage makes up for the extended coverage that claims-made policies lack and occurrence-based policies naturally provide. Tail coverage is utilized in addition to a claims-made policy to keep you covered after you have left your job and your insurance policy is no longer active.

When your employer offers claims-made coverage, look for tail coverage in your employment contract as well. If tail coverage is not included, you should likely negotiate for your employer to cover all or some of the costs associated. If they do not, you will need to find tail coverage elsewhere and pay out of pocket. This will be more expensive in the meantime, but it will pale in comparison to the costs of a future malpractice suit for which you lack the proper coverage.

Keeping yourself protected

With only two main types of coverage, there is not quite as much to consider when evaluating malpractice insurance. Health and disability insurance will usually require more research and offer a wider range of options. Despite this, it is important to know which type of malpractice policy you have and whether tail coverage will be necessary. Do not be afraid to negotiate for tail coverage if you need it, since encountering a span of time without any coverage is best avoided. As with many other parts of your employment contract, securing the right malpractice insurance upfront will prevent financial trouble and headaches in the future.

Malpractice insurance is just one of the many contract terms employed physicians will need to review and possibly negotiate. To help you understand all the terms in your employment contract, The Pennsylvania Medical Society has partnered with Resolve. Resolve is the top physician contract review and negotiation firm in the nation. Having your malpractice insurance and other contract terms reviewed by an experienced attorney will help identify potential problems and ensure you sign for fair terms. Resolve connects you with an attorney who will work with you one-on-one when reviewing your contract and can even negotiate on your behalf. Log in to your PAMED account to access a 15% discount on any of Resolve’s services.