Avoiding Medical Malpractice Coverage Gaps: Risks and Solutions

Medical malpractice insurance provides essential financial protection for healthcare providers, covering legal fees and settlements in the event of a malpractice claim. However, when there’s a gap in this coverage, physicians may find themselves exposed to significant risks.

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What is a Gap In Med Mal Coverage?

A “gap in coverage” occurs when a physician is without malpractice insurance for any period, often resulting from either letting a policy lapse or switching policies without securing “tail coverage” or “prior acts” coverage. Gaps in coverage are problematic because they not only expose providers to potential personal liability but can also make it more challenging to secure future insurance, as many insurers see gaps as red flags for risk.

Operating Without Coverage (“Going Bare”)

When a physician chooses to practice without malpractice insurance—known as “going bare”—they create a gap in coverage. While some may assume this saves costs, it puts both the physician and their assets at considerable financial risk in the event of a claim.

Terminating a Claims-Made Policy Without Proper Transition Coverage

Physicians who cancel a claims-made policy without purchasing “tail coverage” or securing “prior acts” coverage with a new insurer also face a gap. Claims-made policies only cover incidents reported while the policy is active, so without tail or prior acts coverage, any claims filed after the policy ends will be uninsured.

Insurers tend to view these gaps as high-risk, treating them similarly to actual claims, because they suggest periods where the physician may not have taken full responsibility for coverage, potentially indicating financial or professional instability.

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Risks Associated with Med Malpractice Coverage Gaps

Having a gap in medical malpractice coverage exposes physicians to serious financial and legal risks. Any malpractice claims filed during an uninsured period become the physician’s personal responsibility, potentially leading to significant out-of-pocket expenses. Additionally, malpractice coverage gaps can result in higher premiums or even make it difficult to secure new insurance, as many insurers view these gaps as indicators of increased liability or negligence.

How to Close a Gap in Med Mal Coverage

Option 1: Purchase a Stand-Alone Tail

A stand-alone tail policy extends coverage for claims made after a primary policy ends, protecting physicians from liability for incidents that occurred while the original policy was active. This option is often suitable for those transitioning between policies or leaving a practice. When purchasing a stand-alone tail, providers must usually sign a “no-known-loss” letter, confirming there are no known claims from the period being covered.

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Option 2: Find Coverage with a Gap (Surplus Lines Insurance)

For physicians who don’t purchase a tail, surplus lines insurance can offer coverage even with a gap. This type of policy is designed for higher-risk situations, such as a history of coverage gaps. While it provides an option when others may not, surplus lines insurance often comes with higher premiums and limited coverage options.

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Why Avoiding Coverage Gaps Is Essential

Gaps in coverage can lead to substantial personal liability and make future insurance harder and more expensive to obtain. A continuous coverage history demonstrates responsibility, helping keep premiums lower and ensuring protection against unexpected claims.

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Getting Expert Help for Med Mal Insurance Needs

Navigating medical malpractice coverage gaps can be complex, and working with an experienced insurance agent is invaluable for finding the right solutions. The agents at MyMedicalMalpracticeInsurance.com specialize in guiding clients to avoid coverage gaps and, if necessary, to close them as affordably as possible. They can help assess your specific situation, explore cost-effective options like stand-alone tail coverage or surplus lines insurance, and answer any questions you have. If you’re dealing with a coverage gap or want to ensure continuous protection, contact us for personalized support.

*This article has been updated with new information