Should I purchase tail coverage?


Editorial team Published on

You need tail coverage only if you have a claims-made professional liability policy and you are leaving your job, retiring, or switching insurance carriers.

Do You Need It?

  • Yes, if: Your current policy is claims-made (common in medical malpractice, legal, and certain corporate/D&O policies) and it is ending. Tail coverage—known as an Extended Reporting Period (ERP)—protects you from lawsuits filed after your policy ends for incidents that happened while you were still working. Without it, a delayed claim leaves you completely unprotected.
  • No, if: Your policy is occurrence-based. Occurrence policies cover any incident that happened during the policy period no matter when the claim is filed, meaning a tail is unnecessary.
  • No, if: Your new employer or new insurance carrier provides "prior acts" or "nose" coverage that backdates protection to cover your previous work time.

Key Factors to Consider

  • Cost: Tail coverage is typically a one-time purchase. It often costs between 150% and 250% (or more) of your final annual policy premium.
  • Who pays: Check your employment contract. Some employers pay for the tail when you leave, while others require you to cover the cost unless you meet specific conditions (like staying a minimum number of years or retiring).
  • Duration: It should match or exceed the statute of limitations for filing claims in your state (often 1 to 3 years for medical malpractice, though some specialties or situations require longer).
  • Learn more about policy differences and requirements from resources like The Hartford or the AMA Insurance Guide.