tail coverage
Definition
Tail coverage is a type of insurance add-on that protects you from claims filed after your regular insurance policy has ended, as long as the incident that caused the claim happened while your policy was still active. Think of it as a safety net that catches lawsuits or complaints that show up late, which is common in professions like medicine, consulting, or accounting where problems sometimes surface months or years after the fact.
Example
If you ran an accounting firm and a client discovers a costly error you made two years ago, tail coverage would pay for your legal defense even though you cancelled your professional liability insurance last year.
Watch Out
When you cancel or switch professional liability insurance policies, your old insurer will not automatically provide tail coverage, so you need to request and pay for it separately before your policy expires.
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This definition is for informational purposes only and does not constitute legal advice. Please consult with a licensed attorney for legal guidance.