Tail Coverage: Know It before You Need It
Tail coverage, also known as an “extended reporting endorsement,” is extended claim reporting coverage provided at the conclusion of a claims-made policy once it has been canceled. This type of endorsement addresses claims arising from professional incidents that took place while the policy was active (dating back to the retroactive date on the policy) but were not reported or filed until after the policy was terminated. A patient may bring allegations against you months or even years after treatment, making it essential to secure tail coverage when you retire or otherwise terminate your policy coverage.
How Does Tail Coverage Work?
Here are the basics of how tail coverage works and what you should be aware of:
- The cost for tail coverage is based on a percentage of the policy’s premium or a filed tail premium rate based upon the approved rating rules in each state.
- When a policy is canceled at the request of the insured or non-renewed by the insurer, an offer of tail coverage is provided, including the amount of any premium due. This offer is good for a limited period of time. The insured must accept the offer in writing and submit full payment (if required) to activate coverage. We will then generate a tail coverage endorsement for the insured’s records.
- Once issued, tail coverage does not have an expiration date. Coverage will remain available until the limits of liability are exhausted.
It’s important to note that statutes of limitation for a patient to file a claim against an insured vary from state to state. Additionally, these statutes may be waived based on individual circumstances surrounding each claim, thereby allowing a patient to sue after the statute has expired.
Circumstances When Tail Coverage is Issued at No Additional Cost or at a Discounted Premium
If a policy is canceled due to retirement, disability, or death, the insured will be offered tail coverage automatically. Tail coverage may be offered at no charge in the event of the below circumstances and may be issued at no additional cost as a one-time benefit. Here’s how each situation works:
- Retirement: An insured must be permanently and totally retired and must have been continuously insured by us for the five preceding years to receive tail coverage at no additional cost. Leaving a private practice to join a group, a hospital, or to work for a governmental agency is not considered retirement. There are several retirement tail options available depending on your state of practice. Please contact your agent for additional details.
- Disability: If an insured is permanently and totally disabled, resulting in the inability to continue practicing, tail coverage can be provided at no additional cost.
- Death: In this regrettable circumstance, we would need to receive either a copy of the obituary or certificate of death to provide tail coverage for the insured’s estate at no additional cost.
What Else Should I Know about Tail Coverage for a Claims-Made Policy*?
Here are a few other things to know about tail coverage:
- Laws specific to tail coverage and duration vary by state.
- There may be special circumstances where tail coverage would not be offered, including:
- Non-compliance with terms and conditions of the policy.
- The canceled policy is succeeded by a Claims-Made policy and the retroactive date is the same as or earlier than the retroactive date of the policy being canceled.
*Policies written on an Occurrence basis apply to claims differently than Claims-Made policies, and therefore, tail coverage is neither necessary nor offered.
A Final Word on Tail Coverage
Tail coverage offers critical protection so that you are appropriately covered in the future should a claim arise once your policy has ended. Don’t hesitate to contact our Policy Services team or your agent if you have any questions about tail coverage.
The information contained on the DentistCare Blog does not establish a standard of care, nor does it constitute legal advice. The information is for general informational purposes only. We encourage all blog visitors to consult with their personal attorneys for legal advice, as specific legal requirements may vary from state to state. Links or references to organizations, websites, or other information is for reference use only and do not constitute the rendering of legal, financial, or other professional advice or recommendations. All information contained on the blog is subject to change.
