Tail Insurance: What It Is And How It Works (2025)

Updated: August 18, 2025

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Key Takeaways

Tail insurance extends claims-made policy coverage after your policy expires to protect against delayed lawsuits.

Tail coverage helps with professional negligence and D&O claims, but not with general liability or workers' compensation incidents.

Consider tail coverage when retiring or switching carriers; typically match your original policy limits for consistency.

What Is Tail Insurance?

Tail insurance protects you from liability claims after your claims-made policy expires. It's extended coverage that keeps you protected when someone files a lawsuit for work you did in the past.

This coverage only works with claims-made policies, which cover lawsuits filed while your policy is active. For example, if you're a doctor who retires in January but a patient sues you in March for a procedure you did last year, your expired claims-made policy won't help. Tail insurance would cover this delayed claim, though coverage details depend on your specific policy terms and state regulations, so discuss your situation with a licensed insurance professional.

What Does Tail Insurance Cover?

Tail insurance covers claims from any claims-made policy that arise from work you performed while your original policy was active, but clients file after your policy expires. Let's look at some examples:


Medical malpractice claim filed after retirement	✅	After Dr. Smith retired in June, a patient sued her in September over a 2023 surgery. Because she had coverage when she performed the surgery, her tail insurance covers the lawsuit costs.
General liability slip-and-fall claim	❌	Lopez, a contractor, faces a slip-and-fall lawsuit at his former office building. Tail insurance won't cover this claim because general liability policies are occurrence-based and don't offer tail coverage. His original general liability policy would handle this type of claim instead.
Employment practices liability claim with EPLI tail coverage	✅	Brown, a former HR manager, purchased EPLI tail coverage when he retired. Six months later, his old company faces a workplace harassment claim for incidents that happened during his tenure. The EPLI tail coverage protects him since the harassment occurred while his original policy was active.
Commercial auto accident claim	❌	Martinez drove delivery trucks for years before changing jobs. She later faces a lawsuit from a car accident during her previous employment. Her professional liability tail coverage won't help because commercial auto insurance operates on an occurrence basis.
Legal malpractice claim when switching insurance companies	✅	Attorney Jones switches law firms and insurance carriers in March. A former client sues him in August for advice he gave in February. His tail insurance covers this claim since he provided legal services under his original policy.
Professional liability claim without tail coverage	❌	Davis, an accountant, switches insurance companies but skips buying tail coverage. A client later discovers tax preparation errors from Davis's previous job and files a lawsuit. Without tail coverage, she has no protection for work performed under her old policy.
Cyber liability claim with purchased cyber tail coverage	✅	Garcia, an IT consultant, retires and buys cyber liability tail coverage. Eight months later, a former client discovers a data breach from Garcia's time on the project. His cyber tail coverage kicks in because the breach occurred during his active policy period.
Workers' compensation injury claim	❌	Rodriguez owned a construction company before selling it last year. An employee now files a workers' comp claim for an injury from Rodriguez's ownership period. Tail insurance won't cover this because workers' compensation policies are occurrence-based and don't offer tail coverage.
Directors and officers (D&O) liability claim against former board member	✅	Williams served on a company board and purchased D&O tail coverage when she left. Shareholders sue the board six months later over decisions made during her tenure. Her D&O tail policy provides coverage because the challenged decisions occurred while she was actively serving.

You need separate tail coverage for each type of claims-made policy they carry. If you have both professional liability and cyber insurance, you'll need to buy tail coverage for each policy individually when your coverage ends.

How Much Tail Insurance Do I Need?

Tail insurance isn't legally required, but many professionals consider it essential financial protection. Ask yourself these three questions to see if tail insurance makes sense for you:

Do I need tail insurance?

You need tail insurance if you're leaving a claims-made policy and won't have continuous coverage. That includes retiring, changing insurance companies, taking career breaks or switching careers entirely. If you're moving to a new claims-made policy with a different insurer, it may offer "prior acts" or "nose" coverage that eliminates your need for tail insurance by covering your past work under the new policy.

What coverage period should I choose?

Choose unlimited coverage if you're retiring permanently or leaving your profession for good. Pick limited coverage (one to six years) if you're temporarily between jobs, switching carriers or planning to return to practice. Consider your profession's typical claim timeline when choosing coverage periods. Medical malpractice claims can surface many years after treatment, while other professions may see claims emerge sooner.

Should I match my original limits?

Most people choose tail coverage that matches their expiring policy limits to avoid protection gaps. You might want higher limits if you've accumulated significant assets since buying your original policy. Consider lower limits if you're switching to lower-risk work, but this can be risky if claims from your previous high-risk period surface later.

Choose coverage limits matching your original policy. For example, if your current policy provides $1 million per claim coverage, your tail insurance would usually offer the same amount. Coverage amounts vary widely by profession, individual circumstances and state regulations. Your actual costs and available options depend on your claims history, risk factors and current market conditions.

Tail Coverage: Bottom Line

Tail insurance extends your claims-made coverage after your policy ends, protecting you from lawsuits related to past professional services like malpractice claims and board liability issues. General liability and other occurrence policies work differently because they already cover old incidents when claims come up later. If you decide to get tail coverage, retaining the same coverage amounts you had before gives the best protection.

Tail Coverage Insurance: FAQ

Tail insurance can feel complicated, so we've answered the most frequently asked questions to help you make the right coverage decision:

What is tail coverage?

Tail coverage keeps you protected after your claims-made policy ends. It's like a safety net for lawsuits about work you did in the past. If you're retiring or switching insurers, tail insurance covers claims that pop up later from your previous professional services.

How much does tail coverage cost?

Tail insurance costs depend on your profession and risk level, but expect to pay based on your current policy limits. If you're carrying $1 million coverage now, your tail insurance will price around that same protection level, plus factors like your claims history.

What is D&O tail coverage?

Serving on a company board comes with liability risks that don't disappear when you step down. D&O tail coverage protects you from shareholder lawsuits about decisions you made while actively serving. It's smart protection since these claims often surface months or years after you've left the board. Keep in mind that D&O coverage rules differ by state, and some states have specific requirements for board member liability protection.

Do I need tail coverage if I'm retiring?

Retirement means you're closing the door on your claims-made policy without getting a replacement. You'll want tail insurance since malpractice and professional liability claims can appear years later. Go with unlimited coverage for permanent retirement because you won't have the option to extend it later.

How do claims-made and occurrence policies differ?

Claims-made policies only cover lawsuits filed while you're actively insured, which is why you need tail insurance. Occurrence policies automatically cover incidents that happened during your coverage period, even if someone sues you years later.

About Mark Fitzpatrick

Mark Fitzpatrick, a Licensed Property and Casualty Insurance Producer, is MoneyGeek's resident Personal Finance Expert. With over five years of experience analyzing the insurance market, he conducts original research and creates tailored content for all types of buyers. His insights have been featured in publications like CNBC, NBC News and Mashable.

Fitzpatrick holds a master’s degree in economics and international relations from Johns Hopkins University and a bachelor’s degree from Boston College. He's also a five-time Jeopardy champion!

Passionate about economics and insurance, he aims to promote transparency in financial topics and empower others to make confident money decisions.

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Tail Insurance