Tail Coverage, also known as Extended Reporting Period (ERP) Coverage, is a provision within a claims-made policy that allows the insured to report claims that are made against them after the policy has ended. This type of coverage is particularly relevant in liability insurance, where claims can be filed long after the actual event or incident that caused the claim to occur.
Tail Coverage is often used in professional liability policies such as Directors and Officers (D&O) liability, Errors and Omissions (E&O) liability, and medical malpractice insurance. It is designed to protect the insured from claims that arise from professional services provided while the policy was in force but reported after the policy has terminated.
For example, if a doctor retires and ends their malpractice insurance policy, a patient could still file a claim for an incident while the doctor was practicing. If the doctor has tail coverage, they would still be covered for this claim, even though it was filed after the policy ended.
It’s important to note that tail coverage does not extend the policy period or provide coverage for any new work performed after the policy expiration date. It only covers claims for incidents that occurred during the policy period but were reported after the policy ended. The length of tail coverage can vary, but it is often purchased for one, three, five, or ten years or even an unlimited period.