Also known as an Extended Reporting Endorsement, a tail policy is a vital component to your professional liability coverage. Tail coverage must be purchased whenever a claims made policy is discontinued or replaced without prior acts coverage. This will ensure that future claims arising from the period the policy was in effect will continue to be covered. Tail Policies are offered in 1, 2, 3, 5, and indefinite lengths. For example, a 2 year tail, gives the insured 2 years from the termination date of the policy to report a claim from the time period the policy was in place. Obviously, an indefinite tail policy provides the most coverage and will allow the insured to report a claim at anytime in the future.
In the past, Tail policies were only available from the insured’s current insurance company. With only one option, many physicians were forced to purchase an expensive tail policy. In the past, Tail policies could cost anywhere from 150% to 250% of the expiring annual premium. Luckily, some medical malpractice insurance companies recognized the opportunity to provide standalone Tail Policies. There are currently 8 carriers that can offer Tail Policies. Most of these companies are very strong and established carriers with “A” ratings from A.M. Best. We have been able to reduce the cost of a Tail Policy by 20% to 50%.
