The “tail” (extended reporting endorsement) provisions are among the most important variables between policies to consider.
Because a claims-made policy will only cover you if the event happened while the policy was in force (after your “retro-active” date) AND was reported to the carrier while the policy was still in force — you cannot just leave your current carrier and start over with anew insurer!
You need to either purchase the extended reporting endorsement (“tail”) from your current carrier OR purchase prior acts (“nose”) coverage from the new insurance carrier. Purchasing tail coverage from your present carrier effectively converts your claims-made policy into an occurrence policy because it allows you to report claims in the future to that carrier even though the policy period has ended. If you purchase tail coverage from your current insurer and start over with a new insurance company you will have to new retro-active date.
Prior acts (or “nose”) coverage allows you to transfer your existing retro-active date to your new insurance carrier — eliminating the need to purchase tail coverage from your last carrier. It is usually less expensive to obtain prior acts coverage from the new company than to buy tail coverage from the old carrier and then purchase a first year claims-made policy from the new company.
We cannot over-emphasize the importance of your retro-active date. Most physicians we work with are not sure what we mean by retro-active date when we are collecting their information. Your retro-active date is the first day you became insured by a claims-made policy. That date will follow you for the rest of your medical career in most cases.