If you are thinking about buying, selling or closing an agency, or reducing your services, most of your thoughts are probably focused on the future. But it’s important to consider the possible impact of past actions as well, which is why you should be planning for an insurance tail as you make these kinds of moves.
Old Errors Die Hard
An insurance tail provides an extended reporting period for claims and incidents that would normally be covered by an Errors & Omissions policy. If you’ve moved on and an old problem comes to light, this is the coverage that can provide resources to deal with legal fees and damages that might arise from a claim.
How Does It Work?
This kind of coverage can be tailored to meet the particular needs of your situation, but these are standard considerations:
- if you purchase an agency, make sure that the seller has at least a 3-year insurance tail in place
- think about tail insurance in terms of both length of time and level of coverage
- buy as comprehensive a policy as you can afford
- make sure that your coverage works whether you or the carrier cancel your E&O policy for reasons other than default
While you cannot prepare for every eventuality, having an insurance tail in place protects your future against past mistakes, and helps you to keep moving forward.