Extended reporting period: tail coverage when a claims-made policy ends
Overview
An extended reporting period (ERP), often called tail coverage, keeps a claims-made policy accepting claims after it ends, as long as the incident happened while the policy covered it. Without a tail, or a new policy that covers past acts, a lawsuit filed after you cancel, switch insurers, or close the company finds no policy to answer it. New York requires a free 60-day tail; longer ones cost extra.
On this page
Why claims-made policies need a tail
A claims-made policy answers a claim only if the claim is made while the policy is in force. An occurrence policy is the opposite: it pays for injury that happened during its term, no matter when the claim arrives. Most general liability is written on an occurrence form. Most professional liability, directors and officers, and employment practices policies are claims-made, which is where a NEMT company meets the problem. The guide to professional liability for NEMT covers which contracts require that coverage.
Example: a rider’s family sues in March over a missed dialysis transport the previous August. If your claims-made policy ended in December and nothing replaced it, no policy is in force when the claim is made. A tail bought at cancellation would have taken the claim, because the missed trip happened while the policy ran.
A tail has limits of its own. It covers only acts during the expired policy period, never anything that happens during the tail itself, and under most forms buying it does not refill the aggregate limit.
Retroactive dates and prior acts
Many claims-made policies also carry a retroactive date, and they refuse claims arising from acts before it, even when the claim arrives during the policy term. When you change insurers, the date on the new policy decides whether you need a tail at all:
- New policy keeps your old retroactive date. This is prior acts coverage. The new insurer answers claims about past trips, and no tail is needed.
- New policy starts its own retroactive date. Past trips fall outside it, so buy the tail from the outgoing insurer before the purchase window closes.
Underwriters generally refuse full prior acts coverage, with no retroactive date at all, to a business that has never bought liability insurance before.
Basic and supplemental tails
There are two layers, and they are priced differently:
- Basic. The 1986 ISO claims-made general liability form grants it automatically when the policy is cancelled or not renewed, among other triggers. Professional liability policies that include one give 30 to 60 days at no charge when the insurer cancels or does not renew, and only in a few cases when you do.
- Supplemental. An optional, longer tail. Under the standard claims-made general liability form it can run without a time limit, but you must ask for it and pay for it.
What state rules require and what a tail costs
New York’s claims-made rule (11 NYCRR Part 73) requires a free 60-day automatic tail when claims-made coverage ends. Within 30 days of termination, the insurer has to send written notice of it, of the price and availability of a longer tail, and of why a longer tail matters. It must offer a three-year tail on most claims-made coverage, but only a one-year tail on employment practices and most directors and officers coverage. You then have until the later of 60 days after termination or 30 days from the mailing of that notice to accept in writing. In a 2006 opinion under that rule, an insurer’s three-year tail quote was $1,010, twice the $505 annual premium.
In Pennsylvania, Act 86 holds a 60-day purchase window open once cancellation or nonrenewal of a claims-made policy takes effect, and a tail bought in that window starts on the date the policy ended.
When contracts require one
Some buyers write the tail into the contract:
- Arizona Medicaid plan subcontracts. Claims-made professional liability must have a retroactive date before the contract starts, and either continuous coverage or an extended discovery period for two years after the work ends.
- Hamilton County, Ohio. The county’s December 2025 solicitation required unlimited tail coverage or continuous coverage back to the first claims-made policy issued while you held the county contract.
Check these terms before closing a NEMT company, selling it, or replacing a policy after a non-renewal. The same check applies to employment practices liability and abuse coverage.
Frequently asked questions
- If I move to a new insurer, do I still need tail coverage?
- Not if the new policy keeps your original retroactive date, because it will then answer claims about past trips. That feature is called prior acts coverage. If the new insurer sets the retroactive date at its own start date, older incidents are covered by neither policy unless you buy a tail from the old insurer.
- Does a tail restore my policy limits?
- Usually not. Under most forms a tail only extends the time to report claims, so claims reported during it draw on whatever was left of the expired policy's aggregate. State rules can require more. In New York, once a claims-made relationship has run at least three years, a purchased tail must carry an aggregate of at least 100% of the policy's annual aggregate, except on employment practices, directors and officers, and a few other coverages.
- Is my business auto policy claims-made?
- Generally no. ISO's business auto form insures accidents within the policy period, however late the claim comes, so it needs no tail. The policies to check are professional liability and employment practices liability, which are mostly claims-made, and abuse coverage, which current forms usually write as claims-made or modified occurrence.
