Tail coverage

Tail coverage is an endorsement (or an addition) to your insurance that allows you to file a claim against your policy after it expired or was canceled. It applies to claims-made insurance policies and typically involves paying your insurer an additional fee.

Tail coverage is also known as extended reporting period (ERP).

You’ll find tail coverage in claims-made policies, such as professional liability insurance (also called errors and omissions insurance or malpractice insurance) and directors and officers insurance (D&O).

Tail coverage does not apply to occurrence-based policies. You don’t need tail protection for occurrence-based policies because coverage is available as long as the insurable event occurred during the policy period, even if you canceled your policy later.

Tail coverage is different from nose coverage. Nose coverage provides protection back to the first date of continuously maintained insurance coverage (typically with professional liability or E&O insurance). This means your current claims-made policy will even pay for incidents that happened under another policy as long as you kept your insurance active. The first date of coverage is also known as a retroactive date.

Tail coverage protects your business in times of transition. It enhances both your financial security and peace of mind, allowing you to focus more on running your business. For instance:

When you retire from your business, tail coverage makes sure you continue to have liability protection even though you canceled your claims-made insurance policy.

When you switch to a new occurrence-based policy, tail coverage protects your prior acts (work you did while you were insured elsewhere). Without it, you’d only have coverage for incidents that occur when your new policy is active.

Insurers typically charge a fixed percentage of your professional liability insurance policy cost, often between 100 percent and 300 percent of your final premium.

Contact your Insureon agent to add tail coverage to your insurance policy. It’s a good idea to do this before canceling your policy because some companies impose a narrow time window for buying tail protection after cancellation.

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