Malpractice Insurance: Who Is Responsible for It?

As with all professions, there are times when it is best to leave and pursue a new working relationship for whatever reason. In the physician world, a change can come with a hefty price tag. That is because malpractice insurance should not or in some cases cannot end on your last day of work.

So who is responsible for the cost of continuing the insurance plan after you leave? In most cases, it’s you. Now, what sort of amount are we talking about? It can be anything from $10k to over $200k depending on specialty, history, location and overall claims experience by the group.

When we say ‘professional liability insurance’ we are referring to malpractice insurance. It’s a benefit that most doctors are provided while employed but it then terminates once they leave. There are two types of malpractice insurance. Claims based or occurrence based coverage. Most employers have claims based which only covers you while working within the organization. Once you leave it ends…but the risk of being sued does not. In light of this, another 2-4 years of protection is necessary. Who picks up this cost? Normally you have to. And this is what you’ve probably heard of before. It’s called tail coverage.

If you find yourself in this situation, it’s best to at least know how much you should be saving up for this going away gift or shall we say expense.

If you’re about to enter into a new agreement it’s better to approach the situation with a strategy of getting the employer to pick up all, half or at least some of the cost. One way you can address it is by saying ‘whoever is responsible for termination is going to pick up the cost’. That doesn’t remove 100% of the liability to you, but it is better. Another thing you can do is say, “the longer you stay there the more the employer picks up.” You could go at it with a straight up 50/50 sharing of the cost. At the end of the day, you should have a conversation with them about it because in more than 80% of the cases that we negotiate, we are finding employers are willing to change and offer something more favorable. If you have nothing to do with termination you should not be responsible for 100% of this cost.

The other type of malpractice insurance is called occurrence based. This actual covers you any time the claim occurs, even after you’re gone. There is much more risk taken on by this type of policy which is why most employers don’t offer it.

A question we often get asked is, “can I just ask my new employer to give me occurrence based coverage so that this risk is addressed?” The answer is usually no because this is a group benefit change and it would require everyone to get a new policy at an entirely new cost which we’ve seldom seen an employer do.

Whatever the case may be…know what you have or what you’re going to get. Have an action plan to address it. The earlier the better and know that it is OK to have the conversation and you are not the only one doing it. We hit this topic with every contract negotiation we do and the worst kind of response we’ve gotten is that they say “No.” It’s worth a shot and it makes the transition to a new organization much smoother.


Whose Lives Should a Physician Insure?

The Physician’s Life Insurance Primer – Should you own life insurance on others?

The primary reason most people own life insurance is to ensure that their loved ones will have the means to replace lost income and pay for their financial obligations in the event of their premature death. In fact, life insurance is a critical financial tool in any circumstance in which the premature death of an individual could result in a financial hardship on another. So, while owning it on your own life may be the best possible use of life insurance, you may want to consider all circumstances in which it could provide essential financial protection for you, your family or your business. Read more to learn more about who physicians should consider insuring. Continue reading…


Family

Life Insurance as Part of Your Tax Diversification Strategy

The Physician’s Life Insurance Primer Series: How life insurance fits in a savings and tax diversification strategy

For many people, life insurance forms the security foundation of their financial plan. While most financial planners recommend that life insurance be purchased for its protection, and not as a primary savings vehicle, few would argue that cash value life insurance doesn’t have some fairly unique and attractive savings features.  When these are considered in the context of a person’s overall savings and investment strategy, they may offer some advantages for physicians, especially for providing additional tax diversification of income sources. Continue reading…


Physician Family

What Makes Whole Life Insurance Different?

The Physician’s Life Insurance Primer Series: What is Whole Life Insurance and how does it work?

Although whole life insurance, in its present form, has been around for over a century, it remains somewhat of an enigma for people who want to buy permanent protection, especially as new forms of life insurance have sprung up around it over the last several decades. In this article, we’ll discuss how this type of policy works and some of the features that may be useful within a complete financial plan. Continue reading…


How Much Life Insurance Do You Need?

The Physician’s Life Insurance Primer Series: Right-sizing your policy can offer the real peace-of-mind that insurance is meant to provide.

Anyone with a family to protect understands the critical role life insurance plays in their financial plan. However, in determining the actual amount of coverage to provide essential protection needs, many people tend to adhere to simplistic rules-of-thumb, such as a “multiple of income,” which may leave them wondering if they own too much or too little coverage. That’s not exactly the “peace-of-mind” we hope for when buying life insurance.  We will review steps you can take to achieve the peace that life insurance promises. Continue reading…


Physician Financial Review

How to Tell if You’re Getting Good Disability Income Planning Advice

Because they recognize the need to protect their most valuable asset – their earning power – physicians are a ready and willing market for disability insurance sales people. Most physicians, by the time they enter residency, are bombarded with solicitations which continue throughout their working lives.

For most young physicians, the initial advice they receive for addressing their disability income needs is typically provided by insurance sales people, incentivized by their company to sell its products. This leaves to question just how good is the advice and whether it’s offered in the best interest of the physician or the sales person. Continue reading…


Physician Coverage

You’re Covered for Any Injury, Disease, or Disorder Except for…

Medical Exclusion Riders – What are They and How to Avoid Them

Often when we present policy offers that contain medical exclusions to physicians, they are frustrated and consider looking elsewhere for coverage. However, it is likely, if a reason for an exclusion is found by one carrier, others will find it in your medical history as well. Medical exclusions don’t have to be showstoppers, though. Learn how disability insurance can still work for you, even with exclusions. Continue reading…


Fine Print in Physician Contracts

What’s in Your Disability Insurance Policy?

What’s in your disability insurance policy? That question might remind you of a certain credit card commercial in which the announcer asks, “What’s in your wallet?” We won’t subject you to a Viking assault in this blog, as one version of the commercial did onscreen, but we will share our opinion that ignorance of what’s in your disability policy could be as painful as an arrow in your back when it comes time to make a claim.

Disability insurance plans can be complex, and each plan is different. Employer-based disability plans are often free or very inexpensive, but the benefits are likely to be inadequate to cover all contingencies. Are you sure your disability insurance policy contains what’s best for your long-term financial plan? Maybe it’s time to look into it. Continue reading…