Tail Coverage

Definition of "Tail coverage"

Liability insurance that extends beyond the end of the policy period of a liability insurance policy written on a claims-made basis. Liability claims are often made long after the accident or event that caused the injury. Many liability policies are written on a claims-made basis, which means the insurer pays only claims that are received during the policy period. In that case, an insured needs tail coverage to protect against claims not known about at the end of the policy period. For example, a doctor retires, allows her insurance policy to lapse, and a claim comes in six months later. In order to protect herself, the doctor purchases tail coverage.