TAIL COVERAGE Meaning and
Definition
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Tail coverage refers to an extension or continuation of an insurance policy to cover claims that may arise after the policy has been terminated or cancelled. It provides protection for claims made against the insured party for events that occurred during the policy period but were reported after the policy has ended. Tail coverage is commonly used in professional liability insurance, such as medical malpractice or errors and omissions insurance.
When a policy is cancelled or not renewed, the coverage typically ceases once the policy period ends. However, certain claims may not be reported immediately, especially in professions where liability claims often have a longer incubation period. Tail coverage allows the insured party to be protected against claims that may arise in the future, even if they are outside the policy period.
Tail coverage can be purchased as an endorsement or as a separate policy and is generally limited to a specific time frame known as the extended reporting period. This can vary from a few months to several years, depending on the insurance provider and policy terms. The cost of tail coverage is typically a one-time premium payment, and the amount may vary depending on factors such as the type of insurance, claim history, and the length of the extended reporting period.
In summary, tail coverage extends the insurance coverage for claims that occur during the policy period but are reported after the policy has expired or been cancelled, providing additional protection for the insured party against future claims.
Common Misspellings for TAIL COVERAGE
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- tail xoverage
Etymology of TAIL COVERAGE
The term "tail coverage" is a combination of two words: "tail" and "coverage".
1. "Tail" as used in insurance refers to the extended reporting period (ERP) in professional liability insurance policies. It allows policyholders to make claims for incidents that occurred while the policy was active, but were not reported until after the policy has expired. The term "tail" reflects the concept of a prolonged period after something has ended.
2. "Coverage" in insurance terminology refers to the protection provided by the insurance policy.
Therefore, "tail coverage" refers to the extended reporting period coverage offered by insurance companies to protect policyholders against claims that may arise after the expiration of their professional liability insurance policy.
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