When physicians change jobs, one of the most overlooked—and most expensive—contract provisions involves medical malpractice insurance tail coverage. If your malpractice policy is claims-made (as most employer-provided policies are), coverage ends when your employment ends unless you or your employer purchase “tail” insurance. Tail coverage extends protection for any future claims arising from incidents that occurred during your employment but are reported after you’ve left.

The cost of tail coverage can be substantial—often 150% to 300% of your annual malpractice premium (even higher for OBGYNs)—and your contract should clearly state who is responsible for paying it. Some agreements require the physician to cover the entire cost, while others have the employer pay, split the cost, or cover it under certain circumstances, such as termination without cause. The difference in these arrangements can easily amount to tens of thousands of dollars out of your pocket.

Equally important is understanding the policy limits offered by the practice. Malpractice coverage typically specifies a maximum amount the insurer will pay per claim and in total during the policy period (commonly stated as “per incident / aggregate,” such as $1 million / $3 million). If the limits are too low, you could be personally exposed to claims exceeding the policy coverage. When negotiating your agreement, confirm both the amount of coverage and whether tail coverage will maintain those same limits after you leave.

Failing to secure tail coverage can leave you exposed to uncovered lawsuits years after you’ve moved on from a job. That’s why it’s critical to understand your malpractice policy type, your contractual obligations, and your coverage limits before signing an agreement or giving notice. This is an area where careful negotiation can make a big financial difference.

If you’re reviewing a new contract—or preparing to leave your current position—we can help you determine whether tail coverage is required, review your policy limits, and negotiate terms that protect you from expensive surprises later. In physician employment agreements, what you don’t know about tail coverage can hurt you—and your bank account.

Contact us now to review your contract and understand your tail coverage obligations, if any.