Extended Reporting Period (Tail Coverage)

A tail, formally an extended reporting period, lets you report claims after a claims-made policy ends, for incidents that happened while it was in force. It does not extend coverage for new incidents. It only extends the window for reporting old ones. The purchase right, the length, and the price multiplier are all set in the policy before you ever need it.

Tail matters most at exactly the moments when cash is tightest: a sale of the business, a change of ownership, a closure, or a move to a market that will not match the retro date. Tail premiums are commonly quoted as a multiple of the expiring annual premium, and for a multi-facility senior care program that is a real number that has to be budgeted rather than discovered. Read three things now, not at the exit: how long the tail runs, what multiplier applies, and whether the right to buy it survives if the carrier is the one who non-renews you. In an acquisition, who pays for the tail is a negotiable deal term, and sellers who have not read this clause tend to lose that negotiation.