Tail Coverage: The Facts You Need to Know
Extended Reporting Coverage, or tail insurance coverage is an add-on to a company’s E&O policy. Essentially, this coverage allows a purchaser to continue to cover claims after a policy expires. While it will not give a company more time to report an incident, it will give them more time to report one.
E&O Insurance After Retirement or Sale
If you are selling your company or if you plan on retiring, then you can’t purcFhase an new E&O policy. The problem is that some claims may come later on down the line. If a claim is filed against you once you’re no longer working for the agency, you still need that coverage. This is why tail coverage is crucial, It covers you later on.
Cancelling E&O Insurance
Be careful if you plan to cancel your E&O insurance. Sometimes, this will completely invalidate your tail coverage. If you plan to let the plan expire naturally, then you should still have your coverage available to you. However, if your coverage ends up cancelled because of nonpayment, you won’t be able to take advantage of tail coverage.
If you have an E&O policy, then it helps if you also have tail insurance coverage tied to it. This helps if you plan on retiring, selling the agency or going into semi-retirement. While it is not extended coverage, it covers claims filed later.