You may have heard the term, “tail coverage” before but weren’t quite certain exactly what is tail coverage. It’s simply a provision found within a claims-made policy that permits you (the insured) to report claims made against you at such a time as when your policy has expired or been canceled. Tail coverage will require you to pay an additional premium to provide cover if any wrongful act that gave rise to a claim against you took place during the expired/canceled period of the policy.
As an example, let’s say that you purchased a claims-made policy for the period January 1, 2016 to January 1, 2017, and paid for tail coverage with a term extending to Jan. 1 2018. Even if you decided not to renew the policy when it expired in 2017, under the tail coverage, you’ll be able to report claims to the insurer during the period when the tail coverage was active, as long as the claim resulted from a wrongful act that took place during the original policy term.
Tail coverage provides an extended reporting period
An extended reporting period (ERP) is a designated time period after a claims-made policy has expired during which a claim may be made and coverage will be triggered as if the claim had been made during the policy period.
Buying tail coverage is generally a one-time purchase and does not expire, and it cannot be cancelled by the insured or the insurance company that issues it. In most cases, tail coverage must be purchased within 60 days after your claims-made policy terminates, and may not be available if your policy was cancelled due to non-payment of premium.
Essential coverage for physicians
Whether carrying medical malpractice insurance on your own as a private practice physician or as an employee of a group or hospital, tail coverage should be a top priority when considering any changes to your coverage. Most claims-made policies include a provision for malpractice tail coverage. When a claims-made policy is cancelled, or not renewed by a physician, or his or her group, the insurance carrier will offer a tail quote.
A quote for tail coverage must be accepted and paid for (or declined) within a limited period of time, usually 20 – 30 days from the cancellation date. The coverage is optional but is highly recommended for physicians wishing to protect themselves from potential claims that may arise as a result of prior acts. If you want to know what is tail coverage, it’s the best way to cover your actions after your term policy expires.