What Is the “Tail” End of E&O?

What Is the “Tail” End of E&O?

A professional insurance plan, or Errors and Omissions (E&O), is an important type of policy when it comes to running a business with lawsuit risks. Even with the best of intentions and careful business handling, mistakes and problems can arise, so getting E&O insurance is important. When it comes to this type of coverage, though, there is usually mention of a “tail.” What is tail coverage insurance, though?

Tail Coverage Insurance

Tail coverage, or Extended Reporting Coverage (ERP), gives an extended period of time where the insurance company can handle the legal fees involved in the policy holder’s lawsuits. There are some important points, though:

The “tail” end of the policy only covers claims regarding past incidents which occurred during the time of the full E&O insurance period.

Tail coverage can cover for a lifetime, though usually at a high cost.

Other policies may only last a year or two for a cheaper price, so get however much time you can afford. The coverage isn’t purchased until after the cancelation of the E&O plan, and typically must be done within a month or two afterward.

If a claim is made regarding something that happened after the E&O plan was canceled, tail insurance will not cover it.

What is tail coverage insurance? Simply put, it’s a “tail” added to the end of an E&O policy, giving coverage for any past actions that a lawsuit is brought up for in the future.