Tail Coverage Cost
Tail coverage (extended reporting period) allows a law firm to report claims after a claims-made policy has been cancelled or non-renewed. This is essential when a firm dissolves, an attorney retires, or when switching carriers with a gap in retroactive dates. Tail coverage is typically purchased as a one-time premium and provides coverage for a defined period, often one to six years or unlimited.
Typical Range:125-300% of the final year's annual premium (one-time cost)
Key Pricing Factors
- The expiring policy's annual premium, since tail is usually calculated as a multiple of that amount
- Length of the extended reporting period selected (one year, three years, or unlimited)
- The firm's claims history and practice area risk profile
- Whether the firm is dissolving entirely or an individual attorney is departing
- Maturity of the expiring claims-made policy (mature policies typically have higher tail costs)
Tips to Reduce Your Premium
- Negotiate tail coverage terms and pricing into your initial policy or at each renewal before you actually need it
- If switching carriers, ask the new carrier to match or absorb the retroactive date to avoid the need for tail entirely
- Consider a shorter reporting period (one to three years) if the statute of limitations in your jurisdiction is relatively short
- Plan for tail coverage as a retirement or succession expense and build it into partner buyout agreements
- Some carriers offer free or reduced-cost tail if the policy has been in force for a certain number of consecutive years
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