Understanding Claims-Made Policies and Portability
When it comes to professional liability insurance for orthodontists, understanding claims-made policies and the concept of portability is crucial. Whether you’re a recent graduate or an experienced practitioner moving to a new office, navigating these insurance terms can help protect your career and financial well-being.
What is a Claims-Made Policy?
A claims-made policy is a type of professional liability insurance that provides protection for any covered incident when both the incident and the resultant claim occurred and was reported while your policy is/was in force. The only reason you would not be covered for a claim is because you did not continue to maintain your policy. This means that if a claim is filed after the policy has ended—even if the incident occurred while the policy was active—it will not be covered unless you have purchased additional coverage known as “tail coverage.” However, as long as you maintain your policy in force, no tail coverage is needed.
The Importance of Tail Coverage
When leaving a practice, if you have a claims made policy, your employment contract might require you to purchase tail coverage because your employer would be concerned you would not maintain your policy and therefore, they could be liable for a claim that occurred when you were working for them. Tail coverage extends the reporting period for claims made after the termination of your claims-made policy, which would protect your previous employer as well as you.. This coverage is vital because, without it, any claims filed after you leave the practice could go uncovered, even if the incident occurred while you were employed there. The cost of tail coverage can be significant, so it’s essential to review your employment contract carefully and understand your obligations before signing, However, it is important to note that if you have had a claims made policy with AAOIC “tail” coverage is always free when you retire, if you have been insured for at least four years and are age 50 or older.
Portability of Coverage
Portability allows you to transfer your insurance coverage to a new job or practice location without any gaps. As long as you continue to maintain your claims made policy in force, tail coverage is not needed. For orthodontists, maintaining uninterrupted coverage is essential when moving to a new practice. With a claims-made policy from AAOIC, your new location can be insured seamlessly, provided there’s no gap between the old and new policy dates.
Making Informed Insurance Choices
It’s wise to familiarize yourself with the insurance requirements of both your current and future employers to avoid any unexpected financial burdens. Some employers may write a tail coverage requirement into their employment contracts, ensuring they are not left with potential liabilities once an orthodontist leaves. When choosing your professional liability insurance, consider the portability of the policy and the potential need for tail coverage. A smart choice in coverage can prevent unforeseen expenses and provide peace of mind throughout your career.
Understanding the nuances of claims-made policies, portability, and tail coverage can significantly impact your professional journey. Stay informed and proactive about your insurance coverage to ensure continuous protection as you navigate different stages of your orthodontic career. AAOIC believes that protecting your career is worth doing right. Learn more about how AAOIC can help!