March 17th, 2026
What is Tail Insurance and, as a Physician, Why Should I Care About It? by Jim W. Vogele
Introduction
I have written about medical malpractice tail insurance elsewhere on this website but have not devoted an article to the topic. Most readers here will have heard about tail insurance (including cautionary advice that it is expensive, which it is!) and will know that it is relevant to the important topic of professional liability insurance, or medical malpractice insurance. And we all understand that “tail” relates to the end of something – which is indeed the case when it comes to medical malpractice tail insurance.
But if you’re interested in knowing a bit more about this topic, you will find below a brief summary of important points you should understand about the tail insurance provisions we will discuss in your Montana, Washington, Oregon or California physician contract review. While this article will include many references to California physician contracts, the same principles typically apply across the board to physician contracts.
This article commences with a brief explanation of how and why the issue arises in a physician employment contract. This requires a brief discussion of the importance of medical malpractice insurance, including why it must be addressed in a physician employment agreement.
Physician’s professional liability insurance: medical malpractice insurance
Professional liability insurance, aka medical malpractice insurance, will be addressed, or should be addressed, in every physician employment contract. A physician must be insured against medical negligence claims, given the potential damages (economic, noneconomic, and even punitive) that may be proven and recovered by an injured patient in a medical malpractice suit. As you might imagine, even defending against such a suit, regardless of the merits, is expensive. That is, even if a suit does not result in damages, other outcomes such as dismissal of a hard-fought lawsuit could still result in substantial costs, which will generally be included within the coverage provided by a medical malpractice insurance policy (although whether those defense costs are inside or outside policy limits varies).
NOTE: this article is a very general discussion of medical malpractice provisions in physician employment contracts, and does not include detailed discussion of medical malpractice statutes of limitations, applicable damages caps in the states where I practice (CA, OR, WA, and MT), or detailed discussion of desirable coverage limits. However, statutes of limitations and any applicable caps can be readily found online; and of course you can ask AI create a summarizing chart for you with a few keystrokes these days – just remember that “trust but verify’ is a useful and insightful catchphrase, and when it comes to AI, do not neglect the verify step! Nuances concerning statutes of limitations pertain to (a) the age of claimants, (b) the discovery rule with respect to claims, and (c) statutes of repose (which can also be referred to, in Oregon for example, as the “statute of ultimate repose”). Likewise, when it comes to caps on medical malpractice damages, each jurisdiction is different. A few general principles, however, can be summarized: none of the jurisdictions in which I practice have caps on economic damages (lost wages and the like) and the caps on non-economic damages vary from none currently in 2026 in Washington to California’s very specific statutory caps (which are increasing in steps post-2022). In any event, for questions on medical malpractice statutes of limitations and/or medical malpractice claims damages caps, you should consult with an attorney experienced in these areas in addition to any research you do on your own.
As mentioned, this article does not attempt to provide specifics on these legal issues, due to the expansive scope of considerations that must be taken into account as well as due to inevitable changes in the law through legislation and occasionally litigation, including trial court and appellate court rulings. But to the extent that these legal issues pertain to your physician employment contract, I am always happy to discuss them with you during our consultation process. In sum, note that the “verifying” part of the trust but verify equation is why having a Montana, Washington, Oregon, or California physician contract review is generally a good idea.
Claims made policies, occurrence policies, and self-insurance
There are several approaches to the provision of malpractice insurance coverage for employed physicians. Employers may choose to provide coverage for their physicians by obtaining:
- Claims made policies, which cover incidents that occur while the policy covers the physician, i.e. while employed with the employer that is providing the policy. Naturally, however, medical malpractice claims may be filed well after your employment terminates. If you are covered by a claims made policy, claims brought after employment termination will be covered only if a tail insurance policy is purchased. With claims made policies, tail insurance is typically mandatory. The possible exceptions being the employer’s continued maintenance of a group policy that covered you while employed, in which case some policies may provide continued coverage for the individual physician even if the claim is made post-termination so long as the employer continues to maintain and pay for that policy. Nonetheless, if that is the case, verify this with the employer in writing.
- Occurrence policies, which cover incidents that occur during the physician’s employment regardless of when the claim is brought, even if it is after termination of the employment relationship; in other words, tail insurance is typically not required if the insurance provided to you by your employer is under an occurrence type policy.
- Self-insurance, which is provided by some, very large employers and healthcare entities (note that even self-insured entities will often carry excess insurance, and the source of funding of self-insured entities varies).
A note here about Independent Contractors (“IC”s) and insurance policies. If you are practicing medicine as an IC, you may well be required to pay for your own medical malpractice insurance (someone has to pay for it, i.e. if the entity you work with as an IC does not provide coverage, then you need to procure that coverage yourself). Your IC contract (which may be referred to as an Independent Contractor Agreement, or Professional Services Agreement, or something else) should address the topic of medical malpractice insurance. Whether an IC covers the IC’s own expenses is obviously a factor on the IC side of the analysis ledger under various government revenue and labor department tests for classification as an IC versus employee status. In practice, I do see IC agreements for physicians in which the entity contracted with will provide the medical malpractice insurance (locums contracts are one example where this is sometimes found). The various considerations applicable to IC classification are a topic you should discuss with an experienced physician contracts review attorney or employment attorney. In any event, just like physician employment contracts, every IC agreement for a physician (or other healthcare provider) should address medical malpractice coverage.
Tail coverage: unlimited or limited coverage?
Depending on what carriers offer, you may obtain tail insurance for a certain number of years, e.g. the length of the statute of limitations in your jurisdiction or for an unlimited duration, and preferably the latter. As mentioned above, the basic statutes of limitations in your jurisdiction can be easily found online, But there are exceptions to these statutes of limitation, particularly the “discovery” rule, and/or when the injured patient/party is a minor, in which case the statute can be “tolled” for a period of time (up to many years in some cases).
Most tail policies are of the unlimited duration, which is the most protective option of course; and some carriers offer only policies of unlimited duration. While a limited duration policy can be less expensive than the unlimited policy, the potential problem with a limited policy relates back to the NOTE/caveat I included above, and that issue is the “discovery” rule or rules governing the age of your patients. Tail coverage of unlimited duration is clearly the safest choice.
Who pays for tail insurance?
Because tail insurance is expensive, a very important question is: “Who pays?” This question should definitely be answered one way or another in your physician employment contract. Although this is a fairly obvious point, I continue to see contracts in my California physician contract reviews and in the other jurisdictions where I practice, that, believe it or not, fail to address this important point. Occasionally, the issue of tail insurance may not be expressly addressed in a physician employment contract because it is assumed that employment with a self-insured entity guarantees that tail insurance is not required. Again, verify that is the case with your employer if your contract documents are silent on the point (occasionally if a contract does not mention the issue of tail coverage, a related benefits summary document, incorporated by reference into the contract, will explain that tail insurance is covered by the employer).
The question of who is responsible for the cost of tail insurance, or whether it is necessary at all, should simply not be a “gray area.” Responsibility for tail insurance should not be ambiguous. If it is, you need to clear up that ambiguity or shine a light on that gray area by expressly exploring the issue with your employer before signing your physician employment contract. Discussion of the relevant tail insurance provision or provisions of your contract should be part of every California physician contract review (or review of a contract in Oregon, Washington, or Montana). While I rarely make any mention of jurisdictions other than those in which I am licensed to practice, the issue of responsibility for tail insurance is certainly one of those points that apply to physician contracts in any jurisdiction!
The cost of tail insurance
Tail insurance is notoriously expensive. A general rule of thumb is that tail insurance may cost twice the amount of your annual insurance premium. Tail insurance is typically a one-time cost. The specific cost of tail coverage depends upon a number of underwriting factors, including specialty (surgeons and OB/GYN are unfortunately more likely to be sued, with family medical practitioners and pediatricians less apt to be sued), years in practice, the jurisdiction in which you practice (applicable damages caps, statutes of limitations and related legal issues play a part), and your claims history; as you likely know, claims payments and judgments that result from claims against an individual physician, i.e. not against just an entity, are reported to the National Practitioner Data Base, (NPDB”).
Whatever the cost of tail insurance turns out to be, if the type of coverage you have in your employment requires tail coverage, then you need to be sure it is obtained in a timely fashion. You can seek information concerning the expected cost of tail coverage from the management or administration of your employer with respect to their own carrier, and you may also wish to shop around from other carriers for better rates or coverage.
A word about “nose insurance” coverage
Nose insurance, also known as “prior acts coverage,” provides insurance coverage for claims made based upon medical services provided prior to the purchase of the policy. For example, if a claims made malpractice policy were terminated, and tail insurance was not then obtained, a nose coverage policy can accomplish the same purpose. You will occasionally see in a California physician employment contract (or Montana, Washington, or Oregon physician employment contract) a requirement that you are covered by either tail insurance or nose insurance for any claims that could be filed for medical services provided at your prior place of employment. For questions on such provisions, you should discuss these provisions with a California physician contract review attorney, or attorney in the jurisdiction where you are employed.
Policies and Certificates of Insurance
While the interpretation and specifics of coverage under medical malpractice policies is a legal specialty, and is not within my scope of practice, there are a few insurance contract documents that you should be familiar with, and you will certainly need to know if you find yourself attempting to read policies (and the terminology regarding documents is similar to that in your homeowners or auto insurance, so any knowledge on the lingo won’t be completely useless).
You may see the number of documents constituting the policy listed as 5, or 6, or 7, or something else, but in any event the following are basic documentary terms to be aware of:
- Declarations page, which provides a summary of the coverage;
- Professional Liability Insuring Agreement;
- Definitions pages;
- Exclusions pages, which explain what is not covered;
- Endorsements, aka “riders,” which are tantamount to customizing your insurance coverage and can add additional protection above the basic policy coverage. Endorsements can also subtract or delete certain areas of coverage for your policy;
- Conditions, such as concerning submission of claims;
- Certificates of Insurance provide proof of coverage, a summary of the policy, and details concerning the policy-holder and relevant coverage dates.
For specific questions concerning insurance policies, you should consult with a qualified agent or attorney who specializes in insurance coverage matters. For our present purposes regarding physician employment contracts, you will often find a reference to Certificates of Insurance in an employment contract, either because your new employer is requesting one as proof of coverage for acts prior to joining the employer; or because the contract may explain that the employee will be authorized, upon request, with a Certificate to present to future employers; and/or clarifying that either party may be contractually required to provide proof to the other evidencing that tail insurance has been timely obtained and that the other party is identified as an additional insurance if necessary.
Conclusion
Medical malpractice insurance? Admittedly, this is not the most interesting of topics, yet it is one of the most important due diligence considerations that will be addressed in your Oregon, Washington, Montana or California physician contract review. A contract review is in essence the “verify” step within the old saying, “Trust but verify.”
