When you’re looking to find a good Professional, Malpractice or Errors and Omissions (E&O) Insurance policy, there’s a type of policy that can be added on that you should become familiar with, especially if you plan on canceling your insurance policy at some point. Insurance tail coverage is an addition for these types of insurance policies as they can work as an extension for coverage after cancelation. However, before understanding tail policies, typical coverage must be explained first.
Most types of professional insurance policies are specifically Claims-Made or Reported Policies. What this means is that, as long as you have this insurance coverage, the plan will be able to handle the costs involved in claims that are reported while you are covered. As soon as this policy is canceled, the insurance company is no longer involved in any legal case regarding malpractice, negligence, etc.
Extended Reporting Coverage (ERC)
As opposed to a Reported Policy, an Extended Reporting Policy (ERP) expands the amount of time where a claim can be reported and still be covered by the insurance company. This claim, however, must be regarding something that happened during the original coverage period. Insurance tail coverage, then, adds a “tail” to the policy, giving additional time for coverage while still being attached to the “body” of the policy period.