Tail coverage is the common term for a supplemental extended reporting period purchased at policy expiration. Terms range from one year to unlimited, with premium typically expressed as a multiple of the expiring annual premium.
Nose coverage is the alternative approach, where a new carrier assumes the prior retroactive date.
Alternative Names:
Tail, Reporting Endorsement
Why it Matters?
Tail purchase is the standard exit issue for retiring professionals and dissolving practices, and the premium can be substantial, often one to three times the annual rate for unlimited terms. The alternative, prior acts coverage from a new carrier, is frequently cheaper but depends on the new carrier's willingness. Employment and partnership agreements should address who bears the tail cost, since disputes arise when a departing professional and the firm each expect the other to pay.
Frequently Confused with
Related terms
Frequently asked questions
How much does tail coverage cost?
What is the alternative to buying a tail?
