For a claims-made policy to cover claims made after the expiration date, a tail can be purchased to protect the policyholder from past incidents, despite a claim being made post-policy cancellation. He then purchases 'tail' coverage. Since he was continuously covered at the time of the incident, and purchased extended coverage, his old insurance carrier is still liable to pay for the suit, even though the original policy is no longer in effect. Learn from the pros about risk-mitigation, document tracking, and more, with expert articles from BCS.
This free guide breaks down the COI tracking process into individual steps and offers tips, tools, and resources to help you succeed. Privacy Legal Business Credentialing Services. All rights reserved. Vendors: Sales: Watch Demo Login. About BCS? BCS aligns third-party insurance coverage and other documents with contractual requirements.
Solutions Our automated tracking software will take the worry and frustration out of organizing stacks of insurance documents. Conversely, a claims-made policy covers the insured for an incident that occurred during the policy period and was reported as a claim while the policy remained in force. Tail coverage is required by claims-made professional liability insurance, especially if:. Tail coverage will be necessary if you leave the practice and acquire a new insurance carrier in your new place of employment.
Understanding the claims made and occurrence policies and major their differences will help you navigate the choice of which is best for your professional needs. In order to qualify, you must own the previous policy. You are not eligible for the switchover credit if you were previously covered by your employer.
Proof of coverage can be a copy of your declarations page, a memorandum or verification of insurance, or any other valid documentation from your previous insurance company. Claims-made policies have a graduated rate schedule.
The first year rate is fairly low. Each year the rate increases until it caps and levels at the seventh and subsequent years. When you purchase a new policy from The Trust you start at the first year rate.
If you purchase prior acts, you start at the rate that represents the number of years of prior acts you have. Here is how it works:. The tail is actually called an extended reporting period or ERP, for short. The tail gets its name because it becomes active after your policy has terminated that is, you only purchase the tail endorsement when you terminate a claims-made policy. The tail endorsement allows you to report claims that come in after the policy is terminated for covered incidents that occurred while you were insured.
For example: You buy a claims-made policy in You terminate the policy in and buy the tail. The tail allows you to report claims that are brought against you after you drop the policy, as long as the incident occurred while you were insured from to For instance, you buy a policy in and renew it until You cancel the policy and buy the tail in Years later Client X sues you for services you provided while insured. You are covered because 1 You extended the time you had to report the claim indefinitely and 2 The service in question was provided while you were covered by the underlying policy.
Once you purchase the tail, you retain coverage forever. You have 60 days from the time your policy expires to purchase the tail. You cannot be denied tail coverage, even if your policy is non-renewed or cancelled. The tail is free if you retire, become disabled or die while insured with a claims-made policy. The carrier must be notified within 60 days of the termination of your policy to issue a free tail in the case of retirement.
If you die or become disabled, the carrier should be notified within a year. The occurrence policy already guarantees coverage for what happened while you were insured. It does not extend your policy. A claim is covered by an ERP only if it results from an injury or another covered event that occurred before your policy expired. Many claims-made policies provide an automatic ERP if your insurer cancels or non-renews your policy, replaces it with an occurrence policy, or advances the retroactive date.
The automatic ERP usually applies for a short time, such as 60 days. Claims-made policies have a number of pitfalls , so businesses typically buy them out of necessity rather than choice.
Some coverages, such as employment practices liability , are available only under claims-made policies. Other coverages, like employee benefits liability , may be available on either type of form, but the occurrence version may be very expensive.
Because claims-made forms afford less coverage, they are usually cheaper than occurrence forms. Insurance Journal. International Risk Management Institute. Actively scan device characteristics for identification. Use precise geolocation data. Select personalised content. Create a personalised content profile. Measure ad performance. Select basic ads. Create a personalised ads profile. Select personalised ads. Apply market research to generate audience insights.
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