Avoiding Gaps in Coverage
Insurance

Avoiding Gaps in Coverage

A gap in your malpractice coverage is something to avoid if at all possible. In addition to those resulting from a lapse in payment,coverage gaps may occur when switching or canceling policies. Here's what to watch for.


It can happen to anyone: You’re looking through your bills and realize you forgot to mail your professional liability insurance payment.

Or, maybe you had a claims-made policy and switched malpractice insurance companies—not realizing that you needed to carry over the retroactive date or purchase tail coverage or prior acts coverage.

Regardless, it is important for you to ensure that you do not have a gap in your malpractice coverage. In addition to gaps in coverage that result from a lapse in payment, coverage gaps may occur when switching or canceling your malpractice policy.

Here is an example of how this may occur. If the retroactive date of a claims-made policy changes, a gap in coverage may result. The timeline below shows what happened when a doctor switched from a claims-made policy with Company A (Policy Period 1) to a claims-made policy with Company B (Policy Period 2). In this case, the doctor did not carry over his retroactive date of 01/1/2013, nor did he purchase tail coverage from Company A or prior acts coverage from Company B. This switch resulted in a change to the doctor’s retroactive date.

Chart

As the chart shows, the injury occurred during Policy Period 1. Because the doctor changed insurance companies and did not carry over his retroactive date, he now has a new retroactive date. In this case, the doctor did not purchase tail coverage from Company A or prior acts coverage from Company B. Consequently, an injury that occurred on 7/1/13 but was not reported to the insurance company until 7/1/14 would not be covered by either Company A or Company B.

A gap in coverage like this represents a significant risk to doctors and their patients. To avoid a gap in coverage when canceling your policy or when changing insurance companies, you need to either carry over your retroactive date, or purchase tail coverage from your current insurer or prior acts coverage from your prospective insurer. Without choosing one of these options, there would be no coverage for claim(s) reported after the policy canceled—even if the incident(s) occurred when you had the policy.

When purchasing tail coverage, you need to understand the terms of coverage. Typically, tail coverage must be purchased within a certain period of time following cancellation.

With NCMIC, it is a one-time purchase, does not expire and cannot be canceled by you or the insurance company that issues it. Generally, tail coverage may not be purchased if the policy was canceled for nonpayment of premium.


The information in the NCMIC Learning Center is offered solely for general information and educational purposes. It is not offered as, nor does it represent, legal or professional advice. Neither does this information constitute a guideline, practice parameter or standard of care. You should not act or rely upon this information without seeking the advice of an attorney familiar with the specific legal requirements of the state(s) in which you practice. If there is a discrepancy between the site and an insurance policy you have with NCMIC, the policy will prevail.