Tail Premium - Physician Contract Glossary

Tail Premium

Definition

The cost of adding tail insurance or extended reporting to a claims-made policy, which provides coverage for claims filed after the policy ends.

Examples in Context

“In the event of Physician’s termination, Physician shall bear the full cost of the tail premium to extend liability coverage.”

“If Physician resigns voluntarily, Employer will pay 50% of the tail premium.”

Implications for Physicians

• Tail premiums can be a significant one-time expense, especially in high-risk specialties.
• Costs may vary based on prior claims history, coverage limits, or specialty risk.

Negotiation Tips

• Negotiate shared costs, especially if termination is initiated by the employer.
• Request clear language that defines who pays the tail premium and under what circumstances.
• Inquire about financing options or payment plans to ease financial burden.

Red Flags and Pitfalls

• Employer requiring you to pay the full premium regardless of who ends the contract.
• Vague wording about premium calculation, leaving costs unclear.

Related Terms

• Tail Insurance
• Claims-Made Policy
• Professional Liability Insurance

FAQs

• “Is a tail premium tax-deductible?”
  • Yes, in most cases it can be claimed as a business expense. Consult with a tax advisor for specifics.
• “Can a tail premium be financed?”
  • Yes, some insurers offer payment plans for tail premiums to reduce upfront costs.
• “How much does a tail premium cost?”
  • Tail premiums typically range from 150% to 300% of your annual malpractice premium.

Legal Disclaimer

The information provided in this glossary is for educational and informational purposes only and should not be construed as legal advice. While we strive to provide accurate and up-to-date information, this content is intended to help physicians better understand common contract terms and does not replace professional legal guidance.

For personalized advice regarding your employment contract or other legal concerns, we strongly recommend consulting with a qualified attorney who specializes in physician employment contracts.

You can find experienced legal professionals through our Physician Contract Lawyer Directory.