What happens to your policy when a practice changes hands
Most malpractice policies are claims-made. That means the policy that responds is the one in force when the claim is made, not when the treatment happened.
So if you sell and your policy ends, a patient treated last year can still file a claim next year. If nothing is in place, nobody may be there to answer it.
The tail: the piece most sales forget
A tail keeps your old policy able to respond to claims about past care after the policy ends. It has to be bought at the right time, usually when the policy ends. If you miss that window, you usually cannot buy it later.
Before a sale, ask two questions:
- Who pays for the seller's tail, the seller or the buyer?
- Is it written into the purchase agreement?
If you are buying
You are buying the practice's history too. Before you close, we can read the seller's policies and tell you:
- What ends at closing
- What carries over
- What you will need on day one
This includes the medical director arrangement, which often does not survive a sale.
If you are franchising or adding locations
A new location is a change to your policy, not a new policy.
Tell us before it opens, so the new address, providers and services are on your policy from the first day.
Tell us early
The best time to call is before the letter of intent is signed. The latest is 30 days before closing. That gives us time to read the policies and line up anything you need.
Buying several practices or running a portfolio? See Acquirers and Investors.