Tail coverage is an addition to claims-made insurance policies. It protects your business from complaints that are filed after your policy ends. Tail insurance is also known as an extended reporting period because it increases the amount of time you can submit a claim.
Claims-made vs. occurrence policies
A claims-made form includes incidents that you report during the active policy period and tail coverage period. These incidents must occur:
- On or after the effective date, which is when your coverage begins.
- Before your original policy ends.
An occurrence form covers incidents that happen during your specific coverage period, regardless of when you report them. These policies are typically more expensive than claims-made ones because there isn’t a time limit on when you can file a claim.
Can both claims-made and occurrence policies add tail insurance?
Tail policy insurance is available on claims-made forms but not occurrence ones. Occurrence policies don’t have reporting limits, and claims-made ones do. As a result, claims-made forms benefit from extending the reporting period with tail coverage.
For example, a small business owner purchases a claims-made policy in 2013. They decide to end that policy in 2021 and secure 1-year tail coverage. If a former customer files a claim against the business in 2022 for advice given within the active policy window, tail coverage applies.
Do I need tail coverage?
Businesses in transition need tail coverage for claims that occur after their policy ends. This extended reporting period on claims-made insurance forms gives small business owners more flexibility to end or change their insurance coverage without losing protection for prior acts.
Tail coverage benefits a variety of professions, including:
- Technology firms
- Real estate agents
- Insurance agents
For example, a law firm might have professional liability insurance for customer concerns about negligence. This firm could experience costly claims about previous work if it cancels its insurance or switches providers. A tail policy lets the firm adjust any feature of its coverage while insuring past work.
Ultimately, anyone can file damages if they feel they’ve suffered a loss under your care—actual or perceived. Tail coverage helps safeguard your company against these claims.
How much does tail insurance coverage cost?
Tail insurance coverage cost is usually a fixed percentage of your claims-made policy premium, which depends on the following professional liability insurance cost factors:
- Coverage limits
- Business size
- Claims history
How long you’d like your tail coverage to last is also a primary cost factor.
Get started with a tail insurance quote today
Starting a tail insurance quote is the quickest way to get coverage before canceling or changing your existing claims-made policy. Progressive Commercial makes this process easy and offers reliable support when an accident happens.