What should an OB/GYN check on tail coverage and restrictive covenants?

Check the exit before you price the entry, because in this specialty the exit terms carry the largest single numbers in the contract. Read the tail clause and the covenant first. A claims made policy ends when the job ends, and the tail that covers your years there commonly costs 150 to 200 percent of the mature annual premium as one lump sum. A restrictive covenant then decides where you may work next, which decides whether leaving is even practical. Salary is negotiated in the open. These two clauses are where an OB/GYN contract takes its money back.

Part of the OB/GYN hub.

The tail clause, line by line

First, name your policy form in writing. An occurrence policy covers incidents from the years it was in force, whenever the claim arrives, and needs no tail. A claims made policy covers claims reported while the policy is active, so the years you worked stay exposed after you leave unless a tail or prior acts coverage picks them up. Many OB/GYN contracts never state the form plainly, and the time to learn yours is before you sign, not at your exit interview.

Second, find who pays the tail on each separate exit: resignation, termination with cause, termination without cause, retirement, disability, and death. Contracts often split these. An employer may pay when it ends the relationship and assign the cost to you when you resign, which means the clause is really a retention device priced in your premium. Third, price what you would owe. In Florida, the AMA reports a $1M/$3M OB/GYN premium of $243,988 in Miami Dade. At 150 percent, the tail is $365,982, because $243,988 times 1.5 is $365,982. At 200 percent, it is $487,976, because $243,988 times 2 is $487,976. In California, the reported premium is $49,804 in Los Angeles and Orange County, so the same band runs $74,706 to $99,608, because $49,804 times 1.5 is $74,706 and $49,804 times 2 is $99,608. Carriers generally bill the tail within about two months of cancellation, so the figure you compute is a near term lump sum, not a distant abstraction.

Fourth, check the timing and the alternatives. Ask whether a new employer's prior acts coverage, often called nose coverage, can replace the tail, and whether the contract permits that substitution. Ask what happens when the group switches carriers mid employment, since a switch handled with prior acts protection costs you nothing, while a switch handled as a cancellation can present a tail bill inside a job you never left. Heidi, the new attending in the Heidi and Spencer case, signed with her employer carrying the tail on her claims made policy, and she had an attorney review the contract before signing. That one term removed the largest exit cost in her market from her household plan.

The covenant, line by line

A restrictive covenant in a physician contract usually has three moving parts, and each one needs its own read. The first is geography: the distance from your practice sites inside which you may not practice for a set period after leaving. Measure it from every site where you actually work, not only the main hospital, because a radius drawn around three clinic sites can cover a whole metro. The second is scope: whether the bar covers all OB/GYN practice, only obstetrics, only work for named competitors, or only soliciting your former patients. A covenant that bars obstetrics alone still leaves gynecology open, and that difference can be the difference between moving across town and moving across the state. The third is time: how long the bar runs after your last day.

Then read the covenant against the tail together, because the two clauses compound. A physician who owes a $365,982 tail and is barred from practicing near home faces the lump sum and a relocation in the same season. A physician whose employer carries the tail and whose covenant is narrow faces a hard month and a local job search. Ask whether the covenant falls away when the employer terminates you without cause, whether it falls away when the employer breaches first, and whether a buy out price for the covenant is stated. Ask also what counts as a competing practice in a market where one system employs most of the specialty. Every answer belongs in the contract text, not in a recruiter summary, because the text is what a court or an arbitrator will read.

State law shapes both clauses, and it varies enough that general advice stops here. Enforceability of physician covenants differs by state, and tail figures differ by market, as the numbers above show. The review that matters is a health care attorney in your state reading your actual contract, the same step Heidi took before she signed.

Follow up questions

My employer pays the tail only if I stay three years. How should I value that?

Treat the tail as deferred compensation that vests at the stated date, and price it with your market premium. In a Florida market that promise is worth $365,982 to $487,976 at the band, so a job that pays it after three years is offering a large sum that a slightly higher salary elsewhere may not replace. Then read what happens if the employer ends the contract early, because a vesting promise with a termination trap is worth far less than its headline.

Can I negotiate the covenant instead of the salary?

Often, yes, and in this specialty it can be the better trade. A narrower radius, a shorter term, a scope limited to obstetrics, or a clause that falls away on termination without cause all protect the career you are building. An ask that costs the employer nothing today may be granted where a salary ask is refused.

What if the contract is silent on the tail?

Silence assigns the cost to the policyholder by default practice, which is you. A claims made policy that ends with no tail and no prior acts coverage leaves your worked years exposed, and in obstetrics that exposure runs long, because in many states the malpractice clock for a child does not start running until the patient turns 18.

Related questions

• My claims made policy says I pay the tail. What will it cost an OB/GYN?
• Occurrence vs. claims made malpractice: which OB/GYN policy do I have?
• How do I compare paid call against call folded into an OB/GYN salary?

Sources

American Medical Association, Policy Research Perspectives, medical liability premiums (reported $1M/$3M OB/GYN premiums of $243,988 in Miami Dade and $49,804 in Los Angeles and Orange County, accessed October 2026)

Physician Side Gigs, malpractice tail insurance coverage (tail coverage commonly costs 150 to 200 percent of the mature annual premium, and the child limitations clock in many states waits until age 18, accessed October 2026)

Today's Hospitalist, tail coverage before you take that job (carriers generally bill the tail within about two months of cancellation, accessed October 2026)

Takeaways

• Name the policy form first. Occurrence coverage needs no tail, and claims made coverage leaves your worked years exposed without one.
• Price your tail with your market premium: $365,982 to $487,976 on the Florida figure, and $74,706 to $99,608 on the California figure.
• Read who pays the tail on each exit separately, because the clause often splits resignation from termination.
• Read the covenant for geography, scope, and time, and read it against the tail, because the two clauses compound at the same exit.