Glossary
Tail coverage, defined
An option bought when a claims-made policy ends that keeps the carrier responsible for claims reported after expiration, as long as the act itself happened before the policy ended.
In practice
Formally it is an extended reporting period endorsement. It matters at retirement, the sale of a practice, a change of carrier, or when a firm closes. The price is usually a multiple of the final annual premium, paid once. Most policies include a short automatic tail at no charge and offer a longer optional one for a set number of years or without limit, with a deadline to elect it after the policy ends. It adds no new limits; the tail shares whatever remained on the final policy year. When switching carriers, prior acts coverage on the new policy is usually cheaper than buying a tail, so compare both before deciding.
A worked example
Suppose a physician retires and the final year's premium was $10,000. The carrier offers an unlimited tail for $20,000, payable within the election window. Two years later a former patient sues over treatment given during the covered years; the tail responds, subject to the policy's original limit. Invented figures.
Applies to: Professional Liability (E&O) Insurance