When Do You Need a Stand-alone Tail?

Dr. Smith happily joined a new practice on Jan 1. On Feb 1, he received a letter from his previous medical malpractice insurance carrier saying that his previous employer would not purchase his tail coverage for that practice. He is now facing a gap in coverage and is responsible for finding his own tail coverage. Dr. Smith found out he could no longer get tail coverage from his previous carrier (because their offer expired after 30 days). He called us wondering what to do.

Not a week goes by where we are not asked this question about stand-alone tails. A stand-alone tail is simply a tail policy that is purchased from an insurance company different from your previous company.

Why would someone purchase a stand-alone tail?

1. Price. The most compelling reason physicians often have for purchasing a stand-alone tail is price. Since most insurance companies charge 2x the expiring premium for the tail, many doctors don’t have the required savings necessary for the tail, so they begin to shop around for cheaper options.

2. Timing. Most insurance companies cancel the offer of tail after the policy has been cancelled for 30 days (although some companies extend the offer for 60 days) –this means that you have 30 (or 60) days to purchase the tail policy after your policy is terminated. If you delay more than 30 (or 60) days, the insurance company will usually rescind their offer of tail and you will have a gap in coverage. Your only option at that point would be a stand-alone product.

Be Informed: The typical stand-alone tail policy costs 1-1.5x the expiring policy. While physicians are often happy to hear this, in most cases, the stand-alone tail is shorter in duration than what the incumbent offers. So, rather than being lifetime in length (which is typical for an incumbent tail policy), it is often only for 3 years. Thus, we always suggest that you check with your state’s statute of limitations to make sure that the policy you purchase covers you adequately.