What Is a Tail Policy?

Tail insurance coverage can be a lifesaver when used correctly, but it’s not a necessity for every business. Often, tail policies are only needed for transitional periods, so many companies find themselves using them infrequently as projects or product lines wind down. So what is a tail policy, and how does it work?

Extended Claim Periods

Tail coverage is essentially an additional policy feature that allows you to file claims after the end of an insurance term. Most of the time, this is not necessary because policies are renewed and coverage is continuous, but in situations where your company will move on from the project, tail coverage can be essential. The extended claim coverage does not extend the policy’s coverage to incidents that take place after the original policy ended, it allows for claims related to damages that happened during the coverage if they are discovered after it ends.

Who Needs Tail Coverage?

Businesses winding down E&O coverage for an individual or discretely insured project should consider an extended reporting policy if the original insurance does not include the feature already. In some cases, it may still be a good idea even if extended reporting is included in the original policy, as a way of extending it further. The best way to find out if your business could use tail coverage on a policy is to get an evaluation done by a tail insurance specialist.