The problem with leaving a practice is that the liability risks of services you offered in that practice could follow you even after you have left. Patients you had previously served could allege harm or injury due to your actions while you were employed there. Who pays for malpractice tail coverage when leaving a practice?

You need to negotiate well for yourself to get a practice to pay for your malpractice tail coverage. Employer-provided liability insurance protects you, but under the practice’s terms, not yours. You may want to supplement those policies with personal malpractice insurance that follows you wherever you go.



Here’s a more detailed analysis of who pays for your tail coverage when the practice provided claims-made coverage only. Also stick around for contract negotiation tips, which will take center stage in this post.

What Is Malpractice Tail Coverage?

Of course, it makes perfect sense to start by defining this term, though we already covered this topic in more depth: What Is Malpractice Tail Coverage?

It refers to coverage that protects you from claims arising from services you rendered while working for the practice before leaving. You only need it when a claims-made malpractice policy ends.

Malpractice tail coverage is a significant expense, so we’ll explore ways of getting the practice to pay it for you. Before we proceed, consider refreshing yourself on how medical malpractice insurance works.

How Claims-Made Malpractice Insurance Works

Claims-made malpractice insurance generally responds when a claim is made and reported while the policy is active. As long as the policy is active and you’re still attached to the practice.

When you leave the practice, the policy may continue for the practice, while your individual exposure to future claims requires separate consideration.

What Does Tail Coverage Protect?

Tail coverage extends the reporting period for claims involving covered services you provided while the claims-made policy was active. It bridges the gap between the end of your claims-made coverage and the later reporting of a claim.

Let’s say you’re leaving a practice, with no claims made at the time of your departure. Tail coverage covers your liability should a claim about a patient you handled in that practice be launched after you’ve left.

Who Pays for Malpractice Tail Coverage When Leaving a Practice?

It depends on whether the malpractice that the practice was covering you for was claims-made or occurrence-based, and the terms of your contract. We discuss this further in Claims-Made vs. Occurrence Policies for CRNAS. The gist is that you’ll need tail coverage if the policy is claims-made. So, who pays for it?

In general, if you’re leaving a practice with no claims made under your policy yet, it makes sense for the employer to pay for your tail coverage. However, you’re not assured the practice will agree if it’s not on your employment contract. You must strike a favorable bargain during your active employment period.

The practice may agree to pay for the tail, you may be responsible for it, or you may negotiate a shared-cost arrangement. Remember, not all professional liability coverage is the same.

When the Practice Pays for Tail Coverage

Some practices agree to pay for malpractice tail coverage when a physician leaves. It’s best to negotiate these terms in your employment contract before accepting the position.

A practice may also agree to pay the tail when it terminates your employment, while requiring you to pay if you resign. The contract should spell out these conditions clearly.

When the Physician Pays for Tail Coverage

Some employment contracts place responsibility for tail coverage on the departing physician. With such terms, you bear a substantial expense when leaving the practice, particularly if you have been covered by a claims-made policy for several years.

Always understand this obligation upfront, and ask yourself if it’s worth taking such risks for long-term commitments or any engagements that respect your financial future. What perks justify such a trade-off?

When the Cost Is Shared

You can also negotiate a cost-sharing arrangement with the practice. It’s one of the ways to lower your expenses on medical malpractice insurance.

The contract could require each party to pay a specified portion of the tail premium or establish different responsibilities depending on how the employment relationship ends.

The important point is to agree on the arrangement before you sign the contract and put it in writing.

What Your Employment Contract Says Matters

Your malpractice tail coverage responsibility should be clear in your employment agreement. Look for language addressing:

  1. Who pays for the extended reporting coverage,
  2. When the obligation applies,
  3. What happens if you resign, are terminated, retire, or leave the practice for another position.

If the contract leaves these details unclear, ask questions and negotiate the terms before you agree to the employment arrangement.

When Does a Physician Need Tail Coverage?

A physician will always need tail coverage because no medical professional is immune from malpractice claims after leaving a practice. To be clear, leaving a practice has different implications depending on the manner of departure.

You could be fired, or you could resign. The most experienced could also leave a practice for better opportunities or retirement. The manner of your departure doesn’t change the fact that you need tail coverage. However, it may affect who pays for it.

When You Resign From a Practice

Some practices try to restrict high employee turnover by stripping employees of their tail coverage should they choose to leave the practice. You need to watch out for such clauses in your contract, as it could leave you exposed to potential malpractice claims. I

Review your employment contract and negotiate any clauses that limit or eliminate tail coverage upon resignation.

When the Practice Terminates Your Employment

Your employment contract may address tail coverage differently when the practice terminates your employment. Some agreements require the practice to pay the tail in this situation, while others assign the responsibility to the departing physician.

Check the termination provisions in your contract before assuming the practice will cover the cost.

When You Retire

Retirement can leave you with years of previous patient care that remains subject to potential claims. A claims-made policy generally covers claims reported during the active policy period, so tail coverage can provide an extended reporting period after retirement.

Your malpractice carrier can explain the available tail options and the period of coverage they provide.

When You Change Employers

Moving from one practice to another creates another important coverage question. Your new employer may provide malpractice insurance, but that policy generally addresses your work for the new practice.

You still need to account for potential claims arising from services you provided under your previous employer’s claims-made policy. Tail coverage can address that prior exposure.

When a Practice Closes or Is Sold

A practice closure or sale can also affect your malpractice coverage. The practice’s insurance arrangements may change, while claims related to previous patient care can still arise later.

If you are involved in a practice closure or sale, review the malpractice policy and your employment agreement to determine who is responsible for maintaining coverage for prior services.

Why Timing Matters

If you’re switching to another malpractice insurance provider, make sure that the new policy becomes effective on the same day that your current coverage expires to minimize your risk exposure.

Proactiveness ensures seamless and continuous coverage for past patient care. States impose varying requirements and deadlines for obtaining tail coverage too. Check with your state’s medical board.

Waiting until after you leave can make the transition harder, especially when the employment contract already assigns responsibility for the expense.

Review your contract, understand your coverage, and determine the available tail options before your final day of employment.

How Much Does Tail Coverage Cost When Leaving a Practice?

A patient has the liberty to sue for any damages resulting from medical malpractice up to two years after the malpractice occurred. So, you could be sued for something you did or didn’t do two years ago in your previous role. As a result, tail coverage can be expensive.

The amount you pay depends on several factors, so we recommend you get a quote specialized for your situation from a reputable malpractice insurance provider.

Average Cost of Tail Coverage for a Physician

The cost varies significantly based on your specialty, location, policy limits, claims history, and other details of your malpractice coverage.

A physician in a higher-risk specialty may pay more for tail coverage than a physician in a lower-risk specialty. The length of time you have carried the claims-made policy can also affect the premium.

What Affects Tail Coverage Cost?

Several factors can influence the cost of your tail coverage, including:

  1. Medical specialty, as each has a unique risk profile.
  2. Higher policy limits can increase the cost of extended reporting coverage.
  3. Your history of malpractice claims can affect the premium.
  4. Location, as malpractice insurance rates vary by state and market.
  5. The length of your claims-made coverage can affect the potential exposure being covered.
  6. The insurer’s available tail options and terms can affect the final premium.

Get a Tail Coverage Quote Before You Negotiate

Don’t jump right into negotiating a new malpractice insurance policy without first obtaining a quote for tail coverage. Tail coverage is also known as extended reporting coverage, so check if it’s worded that way.

Ask the insurer or practice for a quote or estimate, and it should be specialized to policy and circumstances.

This quote should come with specific terms and pricing for different lengths of coverage, such as one, three, or five years. Then, you can negotiate from an informed position.

How to Negotiate Tail Coverage in an Employment Contract

It’s important to negotiate tail coverage in your employment contract right from the beginning. It’s easier to negotiate before signing, not after.

1. Clarify Who Pays

The contract should state who pays for malpractice tail coverage when the employment relationship ends.

  • If the practice pays, you need that obligation in writing.
  • If you’re responsible for the cost, understand the potential expense before signing.

2. Address Voluntary Resignation vs. Termination

The contract may assign different tail responsibilities depending on how the employment ends. A practice may agree to pay when it terminates or when you resign.

Ask about both situations during negotiations.

3. Specify What Happens if the Practice Terminates You

If the practice ends your employment, negotiate clear language addressing who will purchase and pay for the tail coverage.

4. Address Retirement or Practice Closure

You also need to clarify and negotiate the terms managing situations such as retirement or practice closure. Each situation can create different insurance responsibilities.

Putting these terms in the agreement gives you a clear understanding of your obligations before the situation arises.

5. Define the Required Coverage

If you are responsible for purchasing the tail, determine what coverage the contract requires, especially:

  • Policy limits,
  • The reporting period,
  • Other requirements established by the practice or its insurer.

6. Have Your Personal Malpractice Liability Insurance

Armed with all the details you’ve provided, consider if the assignment is worth your time. If you take it, consider purchasing your own malpractice liability insurance.

We agreed earlier in employer vs. individual malpractice insurance that it’s always smarter to have both.

Get Help Reviewing Your Malpractice Insurance Options

Be proactive, or you’ll be surprised by the significant burden of paying for costly tail coverage or facing financial ruin if any patient sues you for healthcare you offered before leaving a practice.

That’s why we recommend speaking to a malpractice insurance agency or professional specializing in health care, like us. You need to understand your obligations, your employer’s obligations, and how to balance them for your future.

Our experienced team can help you find the right plan. Contact us when you can. For now, peruse these tips for choosing malpractice insurance for medical practitioners.

Posted in Medical Malpractice