Legal Defense Tail Coverage
A smarter alternative to traditional Insurance
Are you a doctor looking for a way to save money on malpractice insurance? Consider purchasing Legal Defense Tail Coverage (LDTC).
HOW LDTC WORKS:
1. LDTC provides doctors with legal representation on any medical malpractice claim arising from incidents prior to your insurance policy’s retroactive date. In other words, LDTC will provide you with defense coverage on any claim that occurs from incidents in your past. LDTC will not cover claims from incidents that occur after the retroactive date of your policy.
2. LDTC covers all of your attorney’s fees and most costs for any malpractice claim. Expert witness fees are covered too for an extra fee.
HOW LDTC save doctors money:
1. To understand this, it is important to know how a claims made malpractice insurance policy work. All claims made policies have a “retroactive date”. A retroactive date is how far back your policy will cover claims.
2. A retroactive date of 4 years or more prior to the inception of your policy is considered a “mature” coverage. It will cover almost every possible claim because claims older than 4 years are usually time barred (depending on your state’s statute of limitations laws).
3. A doctor is permitted to alter to the retroactive date when taking out a policy. Available options are :
a. First Year Coverage (in which the retroactive date is the same date as the commencement date of the policy)
b. Second year Coverage (in which the retroactive date is 1 year prior to the commencement date)
c. Third year Coverage (in which the retroactive date is 2 years prior to the commencement date)
d. Fourth year Coverage (in which retroactive date is 3 years prior to the commencement date)
e. Mature Coverage. (in which the retroactive date is 4 years or more prior to the commencement date)
4. Policy premiums are calculated using a mature rate for underwriting. If you elect to purchase anything less than mature coverage, a discount will apply to your premium. Typical discounts are as follows:
a. First Year Coverage: 65-75%
b. Second Year Coverage: 40-50%
c. Third Year Coverage: 25-35%
d. Fourth Year Coverage: 10-20%
e. Mature: none
5. Thus, if a doctor elects to purchase a First Year Coverage policy, there could be a tremendous savings?
Example A
a. An Ob/Gyn in NYC was paying $200,000/yr for insurance. Coverage Amount: 1.3M/3.9M. Mature policy with a retroactive date of 1/1/2020.
b. The doctor switched to a first year policy for $50,000. Same 1.3M/3.9M in coverage. New Retroactive Date: 1/1/2026
c. The doctor purchased LDTC for $30,000/yr.
d. The doctor’s net savings: $120,000/yr or 60%.
Example B
a. A Plastic Surgeon in Miami, FL was paying $80,000/yr for insurance. Coverage Amount: $250,000/$750,000. Mature policy with a retroactive date of 1/1/2020.
b. The doctor switched to a first year policy for $20,000. Same $250,000/$750,000 in coverage. New Retroactive Date: 1/1/2026
c. The doctor purchased LDTC for $12,000/yr.
d. The doctor’s net savings: $48,000/yr or 60%.
What are the risks of purchasing a First Year Coverage?
The main risk is that a claim may not be covered, which will leave you with no coverage for the claim.
Example C
A doctor purchases a first year coverage malpractice policy on January 1, 2026. It has a retroactive date of January 1, 2026 – the same day as the commencement of the policy. On March 1, 2026, the doctor receives a claim for malpractice arising out an incident that occurred on June 1, 2025. The claim is not covered.
How LDTC reduces this risk of First Year Coverage:
1. LDTC provides legal defense coverage on any claim arising out of an incident that occurred prior to the retroactive date of the policy. Thus, in the Example C above, while the claim may not be covered by your first year coverage insurance policy, it would be covered by LDTC.
2. LDTC would step in an provide an attorney to defend the claim until the final adjudication of the case, or settlement, whichever comes first.
3. The cost of LDTC is only a fraction of the cost of a mature policy. The amount of savings is typically 3-4x the amount spent on LDTC.
What are the risks of LDTC?
1. The main risk of LDTC is that the doctor is responsible to pay any settlement or judgment, not an insurance company.
2. Doctors with LDTC are “self-insuring” themselves for their past conduct.
3. If you are not comfortable with this risk or have the wherewithal to accept such a burden, then this program is not for.
Are there ways to reduce the risk of LDTC?
1. Yes, if a doctor’s assets are protected properly, the doctor has less to fear.
2. A doctor that has LDTC is essentially “bare” for his past. Bare doctors typically pay much less to settle claims than insured doctors do because there is no deep pocket.
3. With good lawyers, most cases can be settled for a reasonable amount (usually less than the amount you saved by not purchasing mature coverage).
In what state is LDTC being offered by Policypro Insurance Agency?
Currently LDTC is being offered in Florida and New York, where participating lawfirms offer the program.
Is LDTC Insurance?
No it is not. It is a legal defense contract between the doctor and the lawfirm to provide attorney services on potential claims arising out of past conduct.
What lawfirms does Policypro currently work with to offer LDTC
Currently Policypro offers the LDTC with the law firm of Lubell & Rosen. [Insert Link to our website]. Lubell & Rosen has been representing physicians for 26 years and is one of the pioneers in offering alternative flat fees for medical malpractice defense matters.
Other Important Questions:
1. Are First Year Coverage Policies accepted at hospitals?
Yes. While many hospitals have by-laws that require their doctors to carry insurance, most hospitals no not place restrictions on the retroactive date of the policy. If your hospital does, please let us know.
2. Are doctors required to carry insurance to be eligible to obtain LDTC?
No. Some doctors who are ready to retire may not need or want insurance coverage. In this case, they would just get the LDTC to cover their past as no insurance is needed for the future.
3. How much does LDTC Cost?
Rates for LDTC are a fraction of the price of insurance. Factors such as claims history, specialty, and office location will affect the rate. Discounts are offered for group rates.
4. How to get started?
Contact Nordia Ramirez from Policypro Insurance Agency and she will send you the documentation to get started.
