When purchasing Errors and Omissions (E&O) insurance, there is often an option to include or add on tail coverage. By doing so, you allow yourself extra time where, if a claim is filed on malpractice done during the policy period, you will have insurance coverage even after the policy expired, making it worth the tail insurance cost. This does not mean that the policy itself is extended, so if something is reported regarding an action that happened after the expiration, it won’t be covered. However, you may need to cancel or allow the insurance to lapse, and you don’t want to be left with no protection. For example, if an act of negligence is reported from during the period where you were covered and you don’t have tail coverage, you cannot start a new policy to cover it and would be forced to pay for it yourself.
The tail insurance cost is highly dependent on the base policy and the amount of time you wish to have covered. Depending on how much you’re paying currently for the premium, the tail coverage will often be a multiple of that calculated based on how long the tail coverage will last.
So how long should you get tail coverage for? While a minimum of three years is recommended, if you can afford more, it’s a good idea to get as long as you can possible.