When physicians review an employment agreement, compensation, call schedules, and benefits usually receive the most attention. Unfortunately, the malpractice insurance provisions often receive very little scrutiny—even though they can have significant financial consequences.
Before signing your next employment agreement, pay close attention to these five areas.
1. What Type of Malpractice Insurance Is Being Provided?
Your employer should clearly state whether they provide:
- Claims-made coverage
- Occurrence coverage
This distinction is critical.
With occurrence coverage, you’re protected for incidents that occur during the policy period, even if a claim is filed years later.
With claims-made coverage, coverage generally applies only if both the incident and the claim occur while the policy remains active. When employment ends, additional tail coverage may be necessary.
2. Who Pays for Tail Coverage?
This is often the most overlooked provision.
Tail coverage can cost 150%–250% of your final annual premium, depending on your specialty and insurance carrier.
Your employment agreement should clearly specify:
- Whether the employer pays for tail coverage
- Whether you pay for tail coverage
- Whether the cost is shared
- Whether the obligation changes depending on who terminates employment
Never assume your employer will provide tail coverage.
3. What Happens If You Leave Earlier Than Expected?
Many agreements include provisions that change the tail coverage obligation based on:
- Length of employment
- Voluntary resignation
- Termination without cause
- Retirement
- Disability
- Death
Understanding these provisions before signing can prevent unpleasant surprises later.
4. Are the Policy Limits Appropriate?
Don’t simply assume the employer’s limits are adequate.
Coverage requirements may differ based on:
- State law
- Hospital credentialing requirements
- Contractual obligations
- Your specialty
- Whether you perform telemedicine
If you practice in multiple states, additional considerations may apply.
5. Understand State-Specific Requirements
Some states have unique malpractice insurance requirements.
For example, physicians practicing in Kansas should understand the requirements of the Kansas Healthcare Stabilization Fund and how those requirements interact with their professional liability coverage.
These requirements can affect both employed physicians and independent contractors.
Final Thoughts
The malpractice insurance section of an employment agreement deserves the same careful review as compensation and benefits.
A few minutes spent understanding these provisions before signing can help avoid significant costs and complications later.
About the Author:
Steve Sopyla, CPCU is President of Sopyla & Associates, LLC, an independent insurance agency specializing exclusively in medical professional liability insurance. With more than 35 years of experience, Steve advises physicians, advanced practice providers, medical practices and hospitals on malpractice insurance, employment agreements, tail coverage, and the Kansas Healthcare Stabilization Fund.
Have questions? Contact Steve Sopyla at 913-648-1651 or steve@sopyla.com.