One of the most common questions we receive at The Doctors Insurance Agency (a national healthcare liability insurance agency and brokerage) is: does my policy include tail ?
The reality is most medical professional liability insurance policies don't include tail; as many physicians know there are two types of Professional Liability Insurance policies for doctors: Occurrence and Claims Made
Occurrence Insurance
A type of policy in which the insured is covered for any incident that occurs (or that did occur) while the policy is (or was) in force, regardless of when the incident is reported or when it becomes a claim. Occurrence insurance for medical liability coverage is rarely offered today because of the difficulty of projecting long-term claims costs under this type of policy. Occurrence policies have the cost of tail built in to the premium so the premiums are usually higher than a Claims-Made policy.
Premiums don't increase (generally)
Generally speaking occurrence policy premiums don't rise each year. This is also a unique characteristic because policyholders get frustrated with the annual increases involved with claims made step rating.
Occurrence policies are more expensive, so claims made medical professional premiums are predominate. In fact, if you can find a solo - stand alone (as opposed to large, institutional medical group) policy that is occurrence, then you should buy it. (This is why The Doctors Insurance Agency Nurse Practitioner professional liability policy is so favorable... the policy has tail provided. These are not only affordable relative to the policy which requires the purchase tail afterwards, but they are available to solo providers.
Occurrence professional liability insurance policies are a smart asset protection strategy. To have tail insurance included in your medical professional liability insurance policy is ideal.
Affordable Nurse Practitioner Claims Made Policies:
The hallmark of an affordable claims made policy is fair, accurate pricing with 'flat' (or non increasing renewals).
Claims Made insurance policy definition:
A type of claims made policy in which a claim must be both made against the insured and reported to the insurer during the policy period for coverage to apply.
These policies increase in price over a pre-determined period (usually five years) and don’t include tail: why would you buy this type of policy?
Not every claims made policy has a scheduled increase, some are flat and that is because the policy premium is built on actuarial tables that don't anticipate a measurable increase in the exposure or the risk of a claim year after year.
The Cost of tail is deferred on claims made policies: unlike occurrence policies, tail is not built-in to these claims made premiums.
Because the claims made premiums are so much less than occurrence and because the extended tail periods of 35 or more years is sufficient to satisfy the risk management of many physicians and medical groups, claims-made has become the overwhelming choice for physicians and healthcare organizations.