In the business world, tail coverage is an Extended Reporting Period, an extension to a claims-made policy. It provides coverage for situations such as wrongful acts that occurred during the time a business or a professional holds a policy, even when someone files a claim after the policy ends. Professionals, including architects, consultants, insurance agents, and real estate agents, commonly add tail coverage to claims-made policies.
Tail Coverage Examples
Whether you’re an architect, a physician or a real estate agent, tail coverage can protect you in the event someone files a claim against you after your policy ends or you cancel it. Here are a few examples of situations in which individuals might consider purchasing tail coverage.
- A real estate agent inactivating their license
- A physician moving to a new practice
- An insurance agent retiring their license
Calculating Tail Coverage
One of the questions frequently asked by businesses and professionals is “How long do you need tail coverage?” Axis Insurance Services, an industry leader in professional and management liability insurance, recommends that any company or individual considering short- or long-term tail coverage should purchase the option with the most time possible. The reasoning behind this recommendation is that an ERP is a fixed amount that you cannot renew or cancel after purchase.