Claims-paid policies are structured differently and may create financial constraints that physicians don’t initially anticipate. Yet many physicians who have claims-paid policies often don’t realize there’s a difference.
In this article, I explain key differences between claims-made and claims-paid coverage, the risks of carrying a claims-paid policy, and which coverage types we recommend for physicians and surgeons.
What is a Claims-Made Policy?
A claims-made policy provides coverage when:
- The incident occurred during the active policy period
- The claim is reported while the policy is still active
Coverage is triggered immediately when the claim is made.
What is a Claims-Paid Policy?
A claims-paid policy is triggered when the claim is paid, rather than when it is reported. This means that if the policy is no longer active when the claim is paid, the carrier won’t cover it.
Why Claims-Paid Coverage Can Increase Risk for Physicians
The differences between claims-made and claims-paid medical malpractice insurance are significant. Because malpractice claims can remain open for years, a physician with a claims-paid policy could be stuck paying malpractice premiums for years after a claim is made, or face paying the claim out of personal assets.
Claims-paid policies may limit your ability to:
- Change carriers
- Switch employers
- Close or sell your practice
- Relocate
- Cancel policies
Any of these situations could trigger expensive penalties or fees—or even leave you with gaps in coverage.
Drawbacks of Claims-Paid Policies
Claims-paid policies often:
- Give insurance carriers greater control over cancellation terms
- Limit your flexibility to change jobs or careers without financial consequences
- Include fine print, opt-out deadlines, or renewal requirements
- Require continued premium payments until a claim is fully resolved
While these policies may appear less expensive upfront, the long-term medical malpractice insurance costs can be significant if you face an open claim or want to switch policies.
Claims-Paid Policy Case Study: When “Cheaper Now” Costs More Later
Dr. Chen, Private Practice Physician
When Dr. Chen opened his private practice, he chose a claims-paid policy because the premium looked lower up front.
Three years later, he was named in a malpractice lawsuit, and the case is still open.
A year after the claim was filed, Dr. Chen accepted a position with a new employer that provides malpractice coverage and shut down his private practice. But because his original coverage was claims-paid, he couldn’t simply walk away from the policy.
To ensure the insurer will fund any eventual settlement or judgment, he’s had to keep the policy active and continue paying premiums for years after closing his practice solely because the claim is still open.
If he cancels the policy before the case is resolved, the carrier may reduce the payment when the claim is finally settled.
Under a claim-made policy, Dr. Chen could typically have purchased tail coverage (or used an employer-provided tail/nose coverage arrangement) and avoided paying ongoing annual premiums just to keep an open claim funded.
Bottom Line: What This Means for Your Practice
Claims-paid policies might look cheaper initially, but an open claim can keep you “on the hook” for years, often costing physicians thousands in continued premiums after they have left or closed their practice.
MEDPLI Recommendation: Why Claims-Made Coverage Comes Out Ahead
Most standard claims-made medical malpractice policies allow physicians to:
This accommodates physicians who expect the best coverage at the most affordable rate. When things change, your malpractice coverage should be flexible.
MEDPLI recommends claims-made or occurrence coverage over claims-paid coverage for physicians from California to New York and everywhere in between.
Protect What Matters Most — Review Your Policy Today
Get a policy review from MEDPLI. We’ll do a comprehensive review of your current policy, identify any hidden gaps, and compare options from only A-rated carriers, tailored to your specialty and state. To speak directly to a claims-made expert, call us.
Claims-Made vs. Claims-Paid Medical Malpractice Insurance FAQs
You can find this information in your policy documents. If you’re unsure, our MEDPLI brokers are happy to review your current policy and explain your coverage.
Premiums vary widely depending on specialty, location, claims history, policy limits, and risk profile. Higher-risk specialties typically carry higher premiums. We compare multiple A-rated carriers to help you find robust coverage at competitive rates.
It depends on your unique situation. We offer detailed policy reviews to help you understand your current policy, interpret any fine print or cancellation requirements, and identify transition strategies. Your options will depend on your claims history, any open claims, and the details of your specific policy.
The “best” carrier will differ depending on your specialty, state, claims history, and risk profile. We’ll help you compare options from top-rated carriers to find a tailored solution.
Get Your Medical Malpractice Insurance Quote Today
Fill out the form below to request a medical malpractice policy review and free quote from MEDPLI.
About the Author
Max Schloemann is a medical malpractice insurance broker helping physicians and surgeons secure Medical Professional Liability coverage. A Magna Cum Laude graduate of Southern Illinois University’s College of Business, he was named Outstanding Management Senior.
Max began his career in 2008 at an industry-leading firm and founded MEDPLI in 2017 to guide private practice doctors and physicians in transition through the complexities of malpractice insurance.
Outside of work, Max, his wife Kristen (a Physician Assistant), and their four kids enjoy the outdoors and attending the kids’ sporting events. For malpractice insurance questions, you can contact Max here.
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