Here at eQuoteMD we are always striving to provide medical professionals with the highest quality of resources available regarding medical malpractice and properly covering your liability exposure. This is where we welcome you to the very first “Ask eQuoteMD with Tim Ryan” question and answer video blog session. Our very own Tim Ryan will be answering your questions on a weekly basis about your medical malpractice insurance coverage needs via video. This is yet another way we remain a nationwide leader for providing solutions to doctors, surgeons, clinics, hospitals and facilities across the United States.
Video Transcript –
Tim Ryan:Hello and welcome to Tim Ryan’s medical malpractice insurance video blog. I’m Tim Ryan and I am here to answer your questions about your medical malpractice insurance coverage.
Recently, I was approached by one of my clients and was asked about the concept of what’s called a “free tail.” Now most of us know what a tail is when it comes to your medical malpractice insurance coverage, but for those of you who don’t, if you have claims-made policy you need insurance enforced whenever the claim comes in. Obviously the claim being a lawsuit brought against a previous patient.
Now, this makes a lot of sense during the time that you are practicing and that will statistically be the time that most claims will be brought against. There is also the chance that a claim can be brought against you after you have stopped practicing. Most states have a statute of limitations of up to two years after an occurrence happens that causes a lawsuit, where a plaintiff or patient can bring a lawsuit against you. For example, you could stop practicing, completely retire, and then within the next two years someone could still bring a lawsuit against you. So, it is very important to make sure that you have coverage during that time. Again you need insurance enforced when the claim is made, if you have a claims-made policy.
These claims-made policies, the tails that come along with them can be quite expensive. For example, most tails are going to be between 100-150 percent, to sometimes 200 percent of your final year’s premium. So let’s take an example. A private practice doctor in New York, whose specialty is internal medicine, actually practicing in New York, New York, will be paying somewhere around $35-40,000 for their medical malpractice insurance coverage. If they decide to retire, and haven’t earned a “free tail,” their tail is going to cost them anywhere between $60-70,000 to purchase just to make sure they are covered after they stop practicing. This is quite a large outlay. Especially if you think about that this doctor has stopped practicing and stopped bringing income from the practice, and most of the time writing that big of a check isn’t very fun. So, obviously we want to be as aware and educated as we can be about how to get a “free tail.”
Every company is a little different and you are going to have to make sure you know exactly what the stipulations are to earn a “free tail” from your specific company. For the most part, you essentially need to be with the same company five years prior to retirement. Ok. So, as long as you are with the same company for five years prior to retirement you get a “free tail.” If we are taking this internal medicine doctor in New York for example, that is a savings of $60,000 or $70,000 just by having a little extra knowledge about how everything works.
There are a couple of things to keep in mind. First off, when the medical malpractice insurance company refers to retirement, that actually means the ceasing of medical practice forever. I get a lot of questions from my clients such as, “If I am stopping practice in New Jersey and are going to move to Pennsylvania and do a part-time thing on the side,” well that does not count as retirement. Even if you are moving states, even if you are completely shutting down a different practice, the medical malpractice insurance companies are going to see your retirement as the actual ceasing of all medical practice. So just keep that in mind. Secondly, and this is probably the most important thing to keep in mind while you are thinking about your “free tail,” is essentially you have to understand exactly what your company’s specific rules are to get that. For example, if your medical malpractice insurance company says you need to be with them five years prior to retirement and you get a nice quote in from a different medical malpractice insurance company that you can save 10-15 percent, if you jump to this new company and you are within that five year timeline; it might be very tempting to jump and change your medical malpractice insurance to get this 15 percent discount. At the same time you have to realize by doing that, you are potentially forfeiting your “free tail” and it is going to cost you a lot more down the road.
All this to say, make sure you are in constant communication with your specific broker, while making sure you understand what your medical malpractice insurance company has set up as guidelines in order for you to earn your “free tail.” Because at the end of the day that knowledge will be able to save you quite a bit of money.
Anyway, I hope this helps. Again, leave me a question down below (in the comments section). I would love to help out in any way that I can. Once again, this is Tim Ryan and Tim Ryan’s medical malpractice insurance video blog. Have a great day!
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