As a doctor begins to think about retiring, one of the things that he or she should include on their list to do before riding off into the sunset is to make sure they have enough medical malpractice insurance. It is important to have enough coverage for claims that may be filed after they have closed the doors to their practice.
Because these types of claims are considered long tail, patients can bring malpractice claims against a doctor many years after treatment occurred. This is one of the reasons why physicians are still at risk, even after they have been retired for several years.
There are two different kinds of policies for medical malpractice claims: claims-made and occurrence. If your policy is a claims-made policy, proper planning is required when you are considering your financial security during retirement. An occurrence policy is more straightforward as you approach retirement.
What are Occurrence Policies?
These types of policies are pretty straightforward. They are fairly simple to understand and the coverage period associated with these policies is similar to auto insurance policies. Once it is purchased, the policy is effective for a particular period of time, and coverage will be provided permanently for any incident that occurs while the policy is in effect.
The policy can also be canceled anytime, and any claims that are made in the future will be covered by the policy. This essentially means that a physician can retire and walk away without having to secure additional coverage or paying more in premiums.
What Are Claims-Made Policies?
With this type of policy, once a physician retires, this does not necessarily mean that they no longer have to worry about medical malpractice. Unlike an occurrence policy, a policy of this type will cover claims that are within certain practice years on the policy.
A claims-made policy will only respond to a claim that is made on a policy that is in effect and that has occurred during the appropriate retroactive time. When this policy is canceled, coverage ends for all past, present and future claims, unless long tail coverage is purchased before retirement.
It is not uncommon for a medical malpractice attorney to explain to physicians the importance of coverage for years after retirement and encourage clients to purchase long tail coverage. There are many insurance companies that will offer physicians extra coverage automatically after they retire. This extension of insurance will allow them to report claims for a certain amount of time after the initial coverage has been canceled.
There is no easy way to say it, but long tail insurance coverage is not cheap. The cost can vary from double to triple the yearly premium you normally pay.
The good news is that in some cases, long tail coverage can be waived during retirement. However, you will need to make sure you meet specific criteria. Speak with an experienced malpractice attorney and decide on the best course of action for your particular financial stability and security needs for the future.