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          Audrey Becker 
          2341 Seven Pines Suite 5
          St. Louis, MO 63146

Phone: 314.878.6888
Toll-free: 877.583.3255
Fax: 314.878.1827
Audrey@ObOnly.com

MALPRACTICE INSURANCE

Professional liability insurance is available in two forms, “occurrence” and “claims made.”

An occurrence policy covers any incident that occurs during the period the policy is in force, regardless of when the claim is filed. For instance, let us assume that you purchase an occurrence policy in 2003 and keep it until 2006 when, for some reason, you do not renew it. In 2010, you are sued for an incident that occurred years earlier, when the policy was in effect. That policy would still cover you, even though the claim was filed long after the policy was canceled.

The advantage of this type of policy is that it requires no “tail coverage.”

The disadvantage is that coverage limits which were sufficient when you bought the policy may be inadequate years later, when the claim is filed. You can’t increase the limits of your occurrence policy after you have canceled it.

A claim-made policy, the most common type, is quite different. It covers you only for claims that are filed during the period the policy is in effect. The advantages of a claims-made policy are that first-year premiums are generally low, since claims are seldom filed immediately, and the limits of the coverage can be adjusted in accordance with current legal awards and judgments.

The disadvantage of a claims-made policy is that, should you drop the policy, you must purchase “tail insurance” which covers you retroactively. Otherwise, you would have no coverage for incidents which occurred during the life of the policy but were not reported until after the policy was canceled.

Tail coverage is sometimes included in your contract, because the employer - who would usually be named in any lawsuit, along with you, and who probably has deeper pockets - wishes to avoid the financial liability inherent in an adverse judgment. On the other hand, some employers will decline to pay for your tail coverage, figuring that to do so subsidizes your leaving. Still other employers may split the cost of tail coverage with you, perhaps on a 50/50 basis. Some may pay for the tail coverage in case of your death, disability or firing, but require that you pay your own tail coverage if you quit. Tail coverage can be very expensive, costing double your last year’s premium, or even more.

Nose coverage is sometimes an alternative for a departing physician. In that case, your new insurance company agrees to cover prior acts as part of the policy. There is an additional fee, of course, but it is usually less than the cost of tail coverage.

You will probably have no choice regarding the type of insurance you are offered. You will be insured by the same type of policy and to the same limits as others in the practice.

To prevent misunderstanding, your contract should specify the type of insurance you will have and the way in which tail coverage will be handled.