insurance

Tail Coverage

Extended reporting period insurance that covers claims made after a policy expires for incidents that occurred during the policy period. This is essential for claims-made policies, providing protection when there's a gap between when an incident happens and when a claim is filed.

Example

“Dr. Smith purchased tail coverage when she retired to protect against any malpractice claims that might be filed years later for treatments she provided during her active practice.”

Memory Tip

Think of a comet's tail - it follows behind the main object, just like tail coverage follows behind your expired policy to catch late-arriving claims.

Why It Matters

Tail coverage prevents devastating financial exposure when switching insurance companies or retiring from practice, as some claims may not surface for years after the triggering incident. Without it, professionals could face personal liability for incidents covered under expired policies.

Common Misconception

Many professionals think their new policy will cover all past incidents, but claims-made policies only cover claims first made during the active policy period. Others assume tail coverage is automatically included, when it typically must be purchased separately and can be expensive.

In Practice

Dr. Johnson had a $1 million claims-made malpractice policy that expired December 31, 2023. In March 2024, a patient filed a lawsuit for a procedure performed in October 2023. Without tail coverage costing $15,000, Dr. Johnson would face the full lawsuit personally. With tail coverage, her former insurance company handles the defense and any settlement up to $1 million.

Etymology

The term 'tail' refers to the extended period that follows the main policy term, like the tail of an animal that extends behind the body, representing coverage that extends beyond the policy's expiration date.

Common Misspellings

tale coveragetail covergetaill coveragetail covrage

More in insurance

Other insurance terms you should know

deductibleThe amount you pay out-of-pocket before your insurance begin…insurance premiumThe amount paid periodically to an insurance company in exch…deductibleThe amount a policyholder must pay out of pocket before insu…copayA fixed amount paid by an insured person at the time of a me…coinsuranceA cost-sharing arrangement where the insured pays a percenta…out-of-pocket maximumThe most an insured person will pay for covered healthcare s…