Professionals providing services, from doctors and lawyers to engineers and accountants, should all carry professional liability insurance, also known as errors and omissions insurance. While that may be common knowledge, what’s less well known is that the coverage of that policy ends when you cancel the policy. When you retire you don’t want to leave yourself open to potential lawsuits that come months or even years after you’ve closed up shop. Instead, look at tail policy insurance for peace of mind.
How Does a Tail Policy Work?
Remember that your professional liability insurance only covers claims made after your policy’s retroactive date but before you cancel the insurance. Tail policy insurance allows for what is called an extended reporting period, or ERP. If you are retiring, rather than maintaining a full liability policy, a tail policy means claims against you are still covered as long as the incident happened during the time you had full coverage.
What Are the Rules for Acquiring a Tail Policy?
A tail policy must be purchased within 90 days of canceling professional liability insurance. A standalone tail policy doesn’t have to be from the same company as your liability coverage. Most financial advisers recommend taking a tail policy for as long a term as you can possibly afford.
Whether you add it to your existing policy or shop a tail policy on its own, this coverage will mean you can enjoy retirement without a backward glance.