Employers will often attempt to burden the physician with purchasing tail coverage
, especially if the physician terminates the contract early.
When the insurer of the physician provides tail coverage
it is done by endorsement to the policy by adding and Extended Reporting Endorsement to the policy thereby accomplishing an extension of time to report claims that have already occurred, but not yet reported.
* if you change insurers or do not renew a claims-made (2) insurance policy, purchasing tail coverage
(3) is recommended.
As a result, most target companies purchase a non-cancellable, pre-paid policy for a six-year period, which is known as run-off or tail coverage
. It can be critical.
You will need "tail" coverage against belated claims after you retire, but many companies provide free tail coverage
after you've been insured for a minimum period (usually 5 years).
1, 2 and 3 year optional tail coverage
available per the policy terms.
"In a mergers and acquisitions scenario, the excess and surplus lines market comes into play through the buyout of historical liabilities and the provision of tail coverage
. There's a need for tailor-made insurance to facilitate the sale or the transition into new ownership," and the excess and surplus market has the freedom of rate and form to provide that coverage when it's needed.
"You don't see things such as tail coverage
on a personal line of business," he says.
In other words, tail coverage
extends the life of the claim policy and makes it current.
When an organization goes out of business, it should always buy the tail coverage
so when the coverage stops, the policy covers the officers and directors for a period of time.
The physicians had been on a "claims-made" policy, so liability protection after the expiration of their current policy would require "tail coverage
." Absent the two physicians entering retirement where the tail coverage
premium would be waived, the tail coverage
expense to remain in practice was quite large.
Supplemental tail coverage
is activated by adding endorsement CG 27 10, Supplemental Extended Reporting Period Endorsement, to the expired or cancelled policy.