As is the case in many other states, medical malpractice insurance in New York falls into three broad categories: claims-made coverage, occurrence coverage and tail coverage. A brief overview of each is provided below.
Claims-made policies cover policyholders for alleged acts of malpractice that take place and are reported to the carrier during the policy period. Claims-made policy premiums are relatively low for the first few years due to the fact that there is often a significant lag between when a treatment is administered and the filing of a claim resulting from that treatment. Because of this, claims-made premiums are structured to increase each year that the coverage is in continuous force until the risk presented approximates a "mature" risk, which usually occurs in years 5 or 6 for individual physicians.
Premiums are typically based on actual past and current experience and physicians can increase liability limits when necessary. Policyholders therefore do not pay premiums for future liability that is difficult to project. Since claims-made policies only cover claims reported, and arising from, incidents that occurred while that policy is in effect, policyholders must be wary when switching carriers or otherwise terminating coverage and should definitely obtain either "tail" coverage (extended reporting coverage) from their old carrier or retroactive (prior-acts) coverage from their new carrier. disability and in the event of death.
An occurrence policy insures for any incident that occurs while the policy is in effect, regardless of when a claim is filed. Under an occurrence policy, insured's pay premiums that take into account not current experience, but future projections as well. Such claims are called "incurred but not reported" (IBNR). Occurrence insurance rates can vary significantly because of the difficulty in projecting future claims expenses. Under an occurrence policy, the limits of liability are those in effect when the incident occurred. The advantage of an occurrence policy is that neither retroactive (prior acts) nor tail coverage is needed when terminating coverage.
Premiums for tail coverage are determined by a doctor's specialty, territory, limits of liability and length of continuous claims-made coverage. Tail coverage gets more expensive the further back in time it must provide coverage since the liability assumed by the carrier becomes greater. It is usually a percentage of the insured's prior years premium.