Tail Coverage

Tail coverage — formally called an extended reporting period (ERP) endorsement — is essential when you cancel or non-renew a claims-made policy. Without it, any claim filed after the policy ends for an incident that occurred during the policy period would have no coverage. The tail extends the reporting window, typically for one to five years or sometimes indefinitely.

For tree service companies, tail coverage most commonly comes into play with contractors pollution liability policies and professional liability policies, which are often written on a claims-made basis. If you carried pollution liability for five years and then cancel the policy, a homeowner who discovers contaminated soil from your herbicide application two years later would have no coverage unless you purchased a tail.

Tail coverage can be expensive — often 100-200% of the final year's premium for a multi-year or unlimited tail. This cost is one reason many tree service owners prefer occurrence-form policies where available. With an occurrence form, you never need tail coverage because the policy that was in effect when the incident happened responds regardless of when the claim is filed.

If you are closing your business, selling your company, or switching carriers on a claims-made line, discuss tail coverage with your agent before the policy expires. Some policies include a built-in "mini tail" (often 30-60 days) at no extra cost, but this is rarely long enough for tree service claims that can surface months or years after the work is done.