It is not often that a physician chooses to partner with a professional liability carrier because of their tail coverage. This coverage, otherwise known as extended reporting endorsement (ERE) coverage, is nevertheless, an important consideration when selecting your Medical Professional Liability Insurance carrier. Tail coverage can vary and most physicians will need to have it at some point in their career.
ERE’s are not uniform in the pricing or coverage provided across carriers, therefore it is important for physicians to know what they are looking for and how these endorsements can vary. Below, Associate Vice President, Michael Owens, of Professional Risk Associates outlines a few questions physicians should keep in mind when considering ERE coverage.
What is the duration of the tail?
Most standard carriers offer an unlimited time period to report claims, but non-standard or surplus lines carriers typically offer extended reporting periods from 1 to five years or possibly unlimited. Premiums vary by time period.
Can I pay for my tail on installments?
Because ERE’s are 100% fully earned upon inception, carriers typically require 100% of the payment upfront. There are some carriers who provide an option to pay in installments within the first year. Because ERE payments can be substantial, this can help alleviate potential cash flow issues.
Do I get a fresh set of limits upon issuance of the tail?
That depends. Some carries reinstate a fresh set of limits while others only provide only the remaining balance from the policy period in effect at the time of the ERE is requested. This is not an issue if there are no recent paid claims at the time the ERE is requested.
Do I retain my consent to settle claims under the tail?
It depends on the carrier. Most standard carriers require physician agreement before claims are settled but some remove that consent when the coverage is provided under an ERE.
How much is my tail going to cost?
The answer ranges from anywhere from 1.5 to 3 times the annual premium with the average being closer to two times. Some carriers use undiscounted premiums as the basis calculating the ERE making it difficult to easily determine the cost. Carriers can change how they calculate an ERE at any time so contacting your agent and requesting an ERE quote is the only way of truly knowing the cost of your ERE.
Who is responsible for paying the tail?
One might be surprised by the number of calls received where a physician or a practice will not know the answer to that question. The answer should be found in the employment contract between entity and the provider.
If you would like additional clarification on any of these questions, or if you would like to know about ERE coverage provided by your specific carrier, please contact your PRA agent, and to learn more about this coverage in general, please see our previous piece, Tail Coverage: What is it, How Does it Work, and When am I Eligible?