We recommend that you examine several coverage conditions in the policies:

• How broad is the definition of who is an insured under the policy.
• Is the policy crafted for the practice of Naturopathic Medicine, or is it an altered allopathic or chiropractic policy.
• What are the exclusions? Is there a deductible?
• Is there a hammer clause?
• What, if any, are the “TAIL” provisions?
• What, if any, are the Death, Disability, and Retirement provisions?
• Are defense costs paid in addition to the liability limit or are they subtracted from the available limit?
• How much coverage is there for defense costs at Medical Board actions?
• Is there defense coverage for Sexual Abuse and/or molestation allegations?
• Is the coverage limited to a specific location or locations?

An Extended Reporting Period or “TAIL” is an endorsement that is generally made available to an insured on a Claims-made policy if the insured elects to end the policy for any reason. This endorsement continues coverage for any late reported claims that arise after the policy has ended. It generally costs anywhere from 100% to 200% of the expiring premium to buy this endorsement depending on the length of coverage being purchased. One year of extended time to report might cost 100% while an unlimited ERP generally costs 200% if available. This endorsement generally must be ordered and paid for within 30 days of the conclusion of the policy.

When a liability policy contains a “retroactive date” or “retro date” that means that the policy is issued on a claims made form. Under a claims-made policy, this coverage provides insurance for claims arising from incidents that occurred while a previous claims-made policy or policies were in effect, but that were not reported until that policy (or the last in a succession of policies) was terminated. With retroactive coverage, the new policy covers such claims. With such coverage, purchase of tail coverage from the previous carrier is not necessary.

A provision included by insurers in some consent-to-settlement clauses to encourage the insured to accept a recommended settlement offer. It provides that if the insured refuses a settlement offer recommend by the insurer, the insurer’s liability is limited to the amount of the recommended settlement offer. Example: The insurer recommends a settlement offer of $50,000. The insured refuses the offer, and the claim results in a judgment of $100,000 against the insured. The insurer will only pay $50,000, less any deductible. The insured is responsible for $50,000, plus any deductible amount.

Some malpractice policies require that the insured secure a signed agreement with each patient to agree to binding arbitration rather than a jury trial in the event of a medical incident leading to patient dissatisfaction. The general purpose of arbitration is to find a middle ground between two opposing positions. While this may work to a provider’s advantage if the standard of care was not met, it might well result in a settlement by a provider who did meet the standard of care.

The typical policy provisions for the granting of a free “TAIL” to an insured are: Age 55 or older and 5 full years of coverage with that insurer. Many policies have no DDR provision and a rare few only require one year insured with the company. When looking at this provision, take note whether the extended reporting period is unlimited or for a specific number of years.

A claims made policy for a new to practice doctor has a lower initial cost since there are no prior acts to insure. Therefore in year one there is only the exposure for the current year. In year two the exposure doubles and generally so does the premium. In year three the exposure is for three years and the rate goes up another 10% or so. And it finally matures in year four and remains steady from there on. The cost of the “tail” from then on would be roughly 200% of the final premium.

You have two choices in this case. In order to have no lapse in coverage you need to have the new insurer pick up your prior acts retroactive date, or you must buy tail from the expiring policy and start over with the new insurer. The prior acts date or Retroactive Date is the first date that the initial policy provided coverage from and is generally found on the policy declarations page.

There are three different policy forms that are generally used: Claims-made, Occurrence, and convertible claims made. The most commonly used form for medical professional liability is the claims made policy. They often cost less up front but require the purchase of an Extended Reporting Period or “tail” if you wish to cancel them. Occurrence policies, if available, are often slightly more expensive but do not require that you purchase a “tail”. A convertible claims-made policy is sort of the best of both worlds. It is less expensive up front and is convertible to occurrence which eliminates the need to ever buy “tail” in the future.

If an Occurrence Form policy is available to a first time buyer it is probably the best choice. The reason is that if that buyer gets a claims made form and then elects to cease coverage for any reason (i.e. Pregnancy, Sabbatical leave, leaving private practice to teach, etc.) they will be faced with buying a “TAIL” at additional expense. If the buyer elects to start on an Occurrence form and the same scenario takes place, the buyer notifies the company of intent to leave practice and any unearned premium for that year is returned and no “TAIL” is required.

When we set out to build this product three years ago we held a meeting with the directors of the state associations from Arizona, California, Oregon and Washington along with several of their physician board members. We asked what they liked and disliked about the coverage offerings available at the time and said “If we could build a program from the ground up for you what would it look like?” The associations are passionate about providing value to their members and do the lobbying to expand your scope of practice, provide educational resources, and help you succeed. We agree strongly with those values and in an effort to help promote membership we decided to offer a 10% premium credit to members. In many cases the discount pays for or comes close to paying for the membership and to us that makes for a great partnership!