There are two basic types of medical professional liability insurance policies: “occurrence” and “claims-made” coverage. Among insureds, there’s often confusion as to the difference between the two. Because the type of policy directly affects the kind of coverage you will have, it’s important they understand how each type works.
The major difference between these policy forms is how coverage is provided:
- Occurrence policies cover incidents that occur during the policy period regardless of when they are reported. There is no need to purchase tail coverage (reflected in the higher premium charged for this coverage), but the buyer’s coverage is restricted to the limits purchased during that policy period.
- Claims-made policies cover incidents that are reported/made during the active policy period—on or after the retroactive date and before the policy expiration date. Tail coverage must be purchased to provide continuing protection for incidents reported after the policy expiration date.
Claims-made coverage is the most economical professional liability coverage form for physicians, dentists, and other professionals in the United States today. With a claims-made policy, an insured can increase their policy limits or add coverages as needs change or as new coverages become available. The claims-made policy is more flexible and provides considerable cost savings during the early years.
Claims-made coverage eliminates some of the uncertainty created by the long-tail nature of medical professional liability claims (i.e., how long it takes a claim to be resolved as measured from the date of the originating incident). It may offer more flexibility and enables ProAssurance to provide coverage and rates that more accurately reflect the ever-changing healthcare environment and any potential losses.
Coverage Features
A ProAssurance claims-made policy provides for tail coverage in the event of death or disability. Insureds also receive tail coverage upon full retirement when continuously covered by ProAssurance on a claims-made basis for a minimum of five years.
For large healthcare organizations, ProAssurance offers tail coverage on both an admitted and excess basis. Insureds can work with their insurance agent to choose from a variety of personalized coverage options, including a deductible, subject to underwriting approval.
Will Tail Coverage Be Needed?
Tail coverage is necessary upon retirement or otherwise ceasing the practice of medicine. If you are moving coverage from an occurrence policy, tail coverage is not necessary. If you are moving coverage from another insurer’s claims-made policy, this coverage may be handled under the prior acts coverage of the new claims-made policy.
With a ProAssurance policy, tail coverage is available—whether for a premium charge or at no additional cost.
The Difference
The Difference is an ongoing educational series from ProAssurance, designed to compare and contrast common items in medical professional liability insurance. The side-by-side comparisons make it easy to compare so you can easily pick up the highlights of each.