What Exactly Is Tail Coverage and How to Know If You Need It
Tail coverage, formally called an extended reporting endorsement, is often the final piece of your legal malpractice insurance. It is used for events like retirement, disability, leaving private practice or even death.
Since legal malpractice is a claims-made policy, continuity of coverage is extremely important – and this importance doesn’t end when your circumstances change. In order to be covered, you must have a policy in place both when the incident occurred and when the claim is reported. That’s where tail coverage comes in – it keeps the door open for claims to be reported after your last policy has expired. Watch the video below to learn more.
Read below to learn additional information about tail coverage, based on common questions we are asked.
Q: I plan to reduce my policy limits when I semi-retire to save money. How will this affect my tail coverage?
A: Tail coverage retains the policy limits that were in place on the last policy of an attorney’s career. Therefore, you should consider whether the premium savings on the reduced limits of liability are worth the potential exposure in retirement. The limits, whatever they are, are for the entirety of the ERE and will be reduced by any defense cost or indemnity payments made on behalf of the attorney.
Q: What happens if I pass away before securing tail coverage?
A: A legal malpractice cause of action can be brought after an attorney’s death. If an attorney dies, tail coverage can be purchased in the name of the deceased attorney’s estate, so long as it’s timely pursued in accord with the policy provisions. Best practices would be for the attorney to have written instructions to alert his or her heirs to the procedure and need for an ERE to protect the attorney’s estate and family.
Q: I worked for an established firm. Wouldn’t they be named in a lawsuit?
A: This assumption may or may not be correct depending upon the factual situation presented. If the attorney has any concern about the longevity of the firm or about the likelihood the firm will continue to purchase professional liability coverage, the attorney should opt to purchase an ERE. Remember, no policy in place at the time the claim is made means no coverage.