Are you a doctor or an attorney who is retiring soon after a lifetime’s worth of medical or legal work? Do you plan on moving from one firm where you worked for over a decade to another firm soon? It’s time to start seriously preparing for your major life change. That means wrapping up important legal matters, like deciding whether or not you want tail coverage on your malpractice insurance.
- What is Tail Coverage?
- Things to Consider About an Extended Reporting Endorsement (ERE) for Malpractice Insurance
- What About the Reporting Period in Tail Coverage?
- Tail Coverage vs. Prior Acts Coverage
What is Tail Coverage in Malpractice Insurance?
Technically, you aren’t purchasing a separate policy of ‘tail coverage’ when you add this onto your malpractice policy. You are actually getting an endorsement on the existing malpractice insurance you have in place. Also known as, an Extended Reporting Period Endorsement (ERE), it provides an extension of the coverage period on your current insurance. So, your insurance will still cover the claim if a previous client comes forward to file suit for malpractice.
The ERE won’t change anything else about an existing attorney malpractice insurance policy. All current terms, liability limits, and conditions described in your policy will remain the same. Also, you likely won’t be able to increase or decrease your limits after retiring. It simply provides that extension of insurance coverage you need for peace of mind years down the road.
Things to Consider About an Extended Reporting Endorsement for Malpractice Insurance
Despite tail coverage being an endorsement of your malpractice insurance, it’s still a fairly complex component of the average policy. There are many things to be aware of when you are looking into this insurance option before retirement:
- Your malpractice insurance still needs to be renewed at the end of every coverage period.
- You’ll be responsible for keeping your payments up to date to maintain coverage.
- Tail coverage will only protect you for past events, not any new events from services provided after you leave the firm.
- If you want to work part-time or moonlight, you’ll need to obtain new malpractice insurance.
- Most providers of malpractice insurance for lawyers or nurses only allow 30 to 60 days to purchase tail coverage after leaving your practice.
What About the Reporting Period in Tail Coverage?
Most tail coverage comes with options to get coverage for a fixed reporting period after you retire, or to get an unlimited reporting period. If you are looking for an Extended Reporting Endorsement (ERE) with a fixed reporting period, it can save you some money on the premiums.
However, the fixed reporting period only offers coverage for claims filed within a certain window of time. This can be two, three, or six years from the date you retire. Of course, this is a problem if you are sued by a previous client beyond that reporting period. If you are an estate lawyer who wrote wills or worked in another area of law where mistakes may not be discovered for several years or more, you might want to choose an unlimited reporting period on your tail coverage.
Tail Coverage vs Prior Acts Coverage
If you are just leaving one law firm and moving to another or one hospital to another, you’ll probably have to choose between getting tail coverage for your current policy or getting a new policy with ‘prior acts coverage.’ These are two different types of coverage for legal and medical malpractice insurance policies.
- Prior Acts Coverage: Extends coverage to the policy holder for claims on events that occured before a policy’s purchase. Usually a start date for coverage is chosen by the lawyer or nurse or doctor when adding this coverage option to their policy.
- Tail Coverage: Provides coverage for events that occurred while you practiced law or medicine under a certain policy, but the claim wasn’t filed until after the coverage period ended.
- Buying an Extended Reporting Endorsement (ERE) is a good way to protect yourself from malpractice suits even after you have long retired from the work.
- Tail coverage is also a type of endorsement on your last active policy, so you aren’t purchasing new insurance.
- Your ERE won’t cover new events from part-time work or moonlighting while in retirement.
- An ERE might be a good idea if you are just moving from one law firm to another firm or one hospital to another one.
- EREs are different from Prior Acts Coverage, which extend coverage to events that occurred before a new attorney malpractice insurance policy was purchased.