Policyholder Services
| << Back |
Do You Know Your Nose From Your Tail?
By Robert Widi, VP Sales & Marketing
Digest, Summer 2000
The advent of claims-made coverage in the 1970s introduced a new insurance lexicon to the medical community. It’s now common for ophthalmologists applying for professional liability coverage to be asked details about everything from their “noses” to their “tails” as well as any gaps in between, proving that if you look hard enough, you can find humor in just about anything – even liability insurance.
How Long Is Your Tail?
In insurance jargon, a tail extends professional liability coverage for incidents that occurred while a claims-made policy was in effect, but that were not filed as a claim until after the policy was canceled. As a rule, tail coverage should be a guaranteed option upon termination of a claims-made policy. OMIC guarantees the availability of tail coverage upon policy termination and provides free tails to physicians at any age who retire after being continuously insured with OMIC for at least 12 months. Tails also are provided at no cost to insureds who suffer permanent and total disability and to the estates of deceased insureds. Some carriers limit the length, or duration, of their tail coverage, which can leave you with an uninsured risk in the future. Always inquire about the tail provisions of a policy before switching carriers to avoid unpleasant surprises down the road. OMIC’s tail provisions allow for lifetime reporting of covered claims. Coverage for fixed periods of one or two years also is available.
How Far Back Does Your Nose Go?
For insurance purposes, a nose provides coverage for claims that arise from medical procedures performed while covered under a previous terminated policy but first reported under your current policy. A nose and a tail are essentially the same thing. It is a nose if you purchase the coverage through the carrier (or policy) you are joining, and a tail if you purchase it from the carrier (or policy) you are leaving. Therefore, if you purchase nose coverage, you do not need tail coverage, and vice versa. As a professional courtesy, many carriers will extend an offer to departing policyholders to purchase tail coverage regardless of whether they obtain nose coverage through their new carrier. Nose coverage also is referred to asretroactive or prior acts coverage and usually will be indicated as the retroactive date on your policy declarations page.
Have You Gone Bare?
Going bare refers to a physician who practices, whether knowingly or not, without the benefit of malpractice insurance. When a physician practices without insurance, he or she is 100% liable for any losses that may result from services rendered. Because there is no way to accurately underwrite this type of risk, a malpractice carrier often will be unable to retroactively cover any uninsured period during which services were rendered. Maintaining continuous coverage is very important under a claims-made policy to ensure that there are no uninsured periods and gaps in coverage, especially if prior acts coverage is requested. Always make sure the retroactive date is accurately recorded on your new policy if you purchase nose coverage, and obtain a copy of the policy endorsement when purchasing tail coverage.
Do You Have Any Free Riders?
Sometimes you can get a free ride, at least when it comes to insurance. Policy endorsements, referred to as riders, are amendments to a policy declarations page that spell out specific coverage issues, such as adding coverage for higher exposure refractive or oculoplastic procedures. Riders sometimes require special underwriting review and may or may not be surcharged. OMIC generally prefers to manage higher risk exposure through underwriting and risk management review rather than through premium surcharges.
How Mature Are You?
When it comes to insurance underwriting, there’s no getting around this question. You’ll be asked about your maturity level throughout your career whenever you inquire about claims-made rates. Premiums for claims-made policies are written in steps to compensate for lower risk exposure during a physician’s first five years of coverage. Because a claim resulting from services rendered during the first year of coverage is not likely to be reported in that same year, the premium is less expensive for the first year of coverage. This is referred to as claims-made year 1. The longer a physician is insured under a claims-made policy, the greater the potential for claims; hence, premiums continue to mature, or increase, through claims-made years 2, 3 and 4. Since most claims are filed within four or five years after an incident, the fifth and all subsequent years of claims-made coverage are referred to as themature rate.
If you have any questions about your OMIC professional liability policy, please contact Robert Widi at (800) 562-OMIC (6642), ext. 654 or rwidi@omic.com.
