The Basics of ERP Coverage

Errors, omissions, negligence and other forms of malpractice can occur in your business. When they do, you need a solid insurance policy that protects you from having to pay legal fees and any subsequent settlement out of pocket. Most E&O and malpractice policies only last for a year, though, and they don’t cover issues that arise outside the policy terms. That is why you need extended reporting period coverage, or tail coverage. What is tail coverage? It is a provision that extends the ability to report on an issue that occurred during the policy term.

Any claims that are made against services your company provided between your E&O policy’s retroactive date and expiration date can be covered under the tail coverage. This add-on allows you to extend your reporting period for a certain amount of time, whether it’s three years or up to ten. It is particularly useful if you are selling your company, retiring or just restructuring your insurance package. While it does not cover services that you provide outside of the associated policy’s time frame, it gives you more than the policy’s one year of protection. When you add an ERP provision to your policy, you can ease some of the concern about possible lawsuits clients might bring against your company.

What is tail coverage? It’s peace of mind.