Tail insurance

Tail Coverage – What It Is and Why You Need It

It’s important to have all your bases covered when opening and running a business, and tail insurance helps you cover them more effectively, especially if you want to sell your business sometime down the road. This vital type of insurance is an add-on to an existing Errors and Omissions (E&O) policy and protects your personal assets by giving you more time to report a claim to your insurance company.

Tail insurance works by allowing you to report E&O claims that arise after the policy expires. While this type of insurance won’t extend the policy past the date of expiration, it will allow claims to be filed after that date, as long the event occurred before the E&O insurance actually expired. Without tail coverage, you could end up being personally responsible for E&O claims made after the policy expires.

Having this extra safety cushion is crucial if you decide to sell your business later on, because buyers often want a tail coverage endorsement of at least three years. It’s always a good idea to purchase coverage with the longest term available in order to ensure the greatest amount of protection against claims from past events.

Purchasing this important E&O insurance add-on not only helps protect your personal assets in the event of future claims, but it makes winding your business down or selling it a much simpler task.