Guides · Risk

Do You Need Your Own Locum Malpractice Policy? When and How to Buy One

By Emre CeylanPublished 13 September 202612 min read

Most locum guides to malpractice insurance are written by staffing agencies, and they are written about the cover the agency provides. That is reasonable — it is what most locums have. It also means almost nobody explains the other case, because the agency has no reason to: what to do when the policy is yours to buy.

This page is that case. The policy mechanics — occurrence versus claims-made, what a tail is, the clauses to read — are in our guide to locum malpractice insurance, and this page assumes them.

When you actually need your own policy

A locum working through one agency, with occurrence cover or a written tail obligation that survives however the engagement ends, usually does not need a separate policy. The cases where you do:

• Direct contracts. A facility or group that contracts with you without an agency in between rarely insures you. If nobody has named the carrier in writing, assume the cover is yours to arrange.
• Several agencies at once. Three agencies can mean three claims-made policies, three retroactive dates and three possible tails. One policy of your own gives you one continuous retroactive date instead.
• Work outside the agency policy's scope. Telemedicine across state lines, moonlighting, a procedure the agency's schedule does not list, or supervising APPs the policy does not mention.
• Agency cover that ends at the assignment. Claims-made cover with no tail leaves you exposed for as long as the statute of limitations runs. Some locums close that gap with their own policy rather than a tail.

Occurrence or claims-made, when you are the one paying

The choice looks different from the buyer's side.

A claims-made policy is priced on a step scale. In the first year it commonly costs somewhere around a third of the mature rate, stepping up each year until it matures after roughly five to seven years. That makes it far cheaper to start — and it means you are deferring part of the cost to the day you stop, when the tail comes due. For a locum who may change carriers, reduce hours or leave clinical work, the tail is the exit price, and it belongs in the comparison from the first quote.

An occurrence policy costs more from day one and nothing afterwards. There is no tail and no retroactive date to protect.

The practical question is not which product is better. It is whether you can see the end of this arrangement. If you expect to switch carriers, a new carrier's prior-acts ("nose") cover can pick up your retroactive date instead of a tail — but only if cover is continuous, so arrange it before the old policy lapses.

What actually sets the premium — and why there is no price table here

Premiums vary more than almost any other cost a locum carries. The main drivers:

• Specialty class. Carriers group specialties by claim experience. Obstetrics, neurosurgery and emergency medicine sit in very different classes from psychiatry or dermatology.
• Territory. Rates are filed by geography, often down to county, because jury verdicts and claim frequency differ sharply from one venue to the next.
• Limits. $1 million per claim / $3 million aggregate is the common baseline; facilities and some states set their own minimums.
• Step year, for claims-made cover, as above.
• Hours. Part-time and limited-schedule discounts exist, and a locum who works fewer weeks a year should ask for them explicitly.
• Claims history and deductible. A clean record and a willingness to carry a deductible both lower the premium.

You will find sites quoting premiums by specialty. We do not, for the same reason we do not publish agency rate data: a figure for one specialty in one territory at one step year is wrong for nearly every reader who sees it, and a confident wrong number on a money page is worse than no number. The only price that means anything is a quote written against your specialty, your counties and your hours.

Licensed carrier, surplus lines or a risk retention group

This distinction rarely appears in a quote summary and matters more than most of what does.

None of the three is automatically wrong. Risk retention groups in particular can be well run and competitively priced, and some specialties rely on them. Two cautions from the Texas Department of Insurance's own shopping guide are worth repeating for any non-admitted policy: defence costs may sit inside the limit, eroding it, and tail or nose cover may not be available at all. The second one can be decisive for a locum.

Whichever type you are offered, check the insurer's standing with your state insurance department and its financial strength rating before you sign. An RRG's required policy disclosure is not small print to skip.

Broker or direct

A broker can put your file in front of several carriers, including ones that do not sell direct, and is normally paid by commission from the carrier rather than by you. Buying direct can be simpler if you already know the carrier you want. For most locums, whose specialty, states and hours do not fit a standard profile, a broker who works with physicians is the faster route to a comparable set of quotes.

Start early. The Texas Department of Insurance suggests getting information to your agent at least four months ahead, responding quickly to requests and documenting every exchange. Underwriting a clinician with several states and an irregular schedule takes longer than it looks.

Seven states add a layer: patient compensation funds

A handful of states run a patient compensation fund that sits above a provider's own policy. Where it applies, you may owe a surcharge and your policy may need specific underlying limits.

• Mandatory for most providers: Kansas, Pennsylvania, and Wisconsin (for providers practising there more than 240 hours a year).
• Largely voluntary: Indiana, Louisiana, Nebraska and New Mexico.

If an assignment is in one of these states, ask the carrier — or the agency, if it is their policy — whether the cover satisfies the fund's requirements and who pays the surcharge. Participation rules and surcharges change, so confirm with the state fund rather than relying on a list, including this one.

Your own policy and the agency's at the same time

Carrying your own policy while an agency also covers you does not automatically double your protection. Each policy's "other insurance" clause decides which responds first and how costs are shared, and two policies that each try to be excess over the other can produce an argument at exactly the wrong moment.

• Tell your carrier about agency assignments and ask how the policies interact.
• Ask the agency for its certificate of insurance and the policy's other-insurance wording.
• Make sure your own policy lists the states and practice settings you actually work in.

What it costs after tax

A premium you pay yourself is an ordinary and necessary business expense under IRC § 162, deducted on Schedule C. It reduces net profit, so it lowers income tax and self-employment tax — see locum tenens tax deductions.

A tail premium is deductible in the year you pay it, which can land in a year with little income to deduct it against. If you can see a tail purchase coming, talk to your CPA about timing before you buy it.

What to have ready before asking for quotes

1. A current CV with dates for every position and assignment.
2. The states and facilities you expect to work in, and your expected hours or weeks per year.
3. Your specialty and the procedures you perform, including any supervision of APPs.
4. Loss runs — your claims history — from every carrier that has insured you.
5. The declarations page of any current policy, with its retroactive date.
6. The limits you need, including any facility or state minimums.
7. A start date at least four months out, and a note of when any existing cover ends.

What this page does not do

It does not quote premiums, recommend a carrier or tell you whether a particular policy is adequate. Malpractice insurance is written against your specialty, your venues and your history, and the policy wording always governs. This is general information, not insurance, legal or tax advice — take the decision to a licensed broker who works with physicians, and the tax side to a CPA.

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