Tail insurance isn’t an everyday form of coverage that most business owners need to think about, so it’s no surprise if you’re new to shopping for it and seeking answers. It’s essentially the same tool as an extended reporting period for a policy, the difference being that tail insurance coverage is purchased separately from the policy whose reporting it extends. Often, it’s not even purchased from the same insurer.
The policy essentially extends the coverage of the same claims to damages that come to light after the policy ends that the original insurance covered. The damages had to be caused during the original policy coverage period, but the tail coverage allows for claims to be paid out, which protects you from being financially liable for old work that was covered when it was performed.
Which Industries Use Tail Coverage?
Tail insurance is a common tool for businesses winding down operations, so it’s used by large and medium-sized businesses in many industries. Basically any company with multiple sites might need it, if one shuts down. Similarly, it can be used to cover third party liability you have for old projects, making it useful for construction and manufacturing. Smaller companies need it less often, but it’s used frequently for professional liability insurance for individuals in many fields. It can provide protection against the actions of former employees or officers of the company, extend malpractice reporting windows, or similarly extend any reporting windows for the insurance you are winding down when you change policies.