The next issue to consider is the type of insurance to obtain. Basically, malpractice insurance takes the following two forms: claims made and occurrence. The most common, and affordable, form of malpractice insurance is claims made. This coverage responds to any covered claim that is reported to the insurer during the policy period where the event occurred within the policy period. For example, if the claims-made coverage commenced on January 1, 2005, and is renewed continuously through calendar year 2008, it will cover any claim reported during 2008 if the event occurred on or after the inception date of the policy (ie, on or after January 1, 2005). Inasmuch as the exposures are limited to the cases presented during the policy period, first-year claims-made coverage is more affordable than occurrence coverage, which, as discussed below, covers all exposures arising from events occurring during the policy year regardless of when the claim is filed. As demonstrated in the example discussed above, if a physician is insured with a company on a claims-made basis for multiple years, the covered exposures will extend back to events occurring on or after the inception date of the original coverage. Under these circumstances, an insurer will utilize step-level premium adjustments as an insured physician moves from first-year claims-made coverage to mature claims-made coverage over a period of 4 to 5 years. The increased exposure assumed is reflected in the step premium adjustments that typically would be 35% of the occurrence rate in year 1 and 95% of the occurrence rate in year 4 or 5. With claims-made coverage, it is essential that the physician secure “tail” coverage before transitioning to another carrier. With tail coverage in place, the prior carrier covers any claims subsequently reported with event dates during the policy period. Premiums for tail coverage vary, but generally the cost involved is significant and is frequently quoted at 150% of the premium for the last year. Thus, if the premium for the last year of coverage were $100,000, the premium for the tail coverage would be $150,000. The danger in not securing tail coverage is that the prior carrier will not cover any claim that subsequently is reported with an event date during the prior policy period leaving the physician with exposure for the cost of defending the claim and any payment made to resolve the claim. This potentially could be financially devastating for the physician. An alternative to tail coverage is prior acts coverage secured through a subsequent carrier. Under this coverage, a carrier agrees for an additional premium to cover claims involving events occurring prior to the inception date of the coverage. Generally though, carriers are reluctant to offer this coverage, and where they do offer it, it usually is prohibitively expensive.