Tail coverage, also known as an extended reporting period provision, is a benefit that can be added to a claims-made policy. Find out what it covers and whether it might be right for your business.
Types of Claims Covered
A claims-made policy covers financial losses a business may experience due to wrongful acts, accidents, or mistakes. However, if the insurance policy has expired by the time a claim is filed, the company can be left unprotected. Tail coverage is designed for incidents that occur during the time of the original claims-made policy, in case the policy is no longer active when the report of wrong-doing is made.
Period of Time Covered
How long should tail coverage last? Most policies last for one year, but can vary depending on the insurance company. It is best to always purchase the maximum time available. Other things to know about tail policy coverage are that it:
- Does not cover acts committed during the period of tail coverage
- Cannot be renewed or canceled
- Is purchased for a specific amount of time and cannot be extended
Because employees and clients sometimes wait months or even years to file a claim, extended reporting period provisions are especially recommended for companies going out of business or being sold.