View Full Version : How to preserve claims coverage when you leave a franchise or the industry

Brian Hannigan
06-22-2018, 05:06 PM
How to preserve claims coverage when you leave a franchise or the industry
Published on 2018-06-13 00:19:55

Planning for retirement? Interested in another field? Thinking about selling your business? Then you should consider home inspector tail coverage.
No matter your reason for making a career shift, it’s important to know how the change could affect your insurance coverage. After all, no one wants an uncovered lawsuit from an old client to damper their new job or retirement. Find out how home inspector tail coverage can preserve your claims protection below.

What’s tail coverage?
Formally known as an extended reporting period (ERP) endorsement, tail coverage allows home inspectors to report claims for inspections that would have been covered prior to their last policy’s expiration.

Why’s tail coverage necessary in the first place?
Remember from our earlier article that most errors and omissions (E&O) insurance is claims-made. That means inspectors need to have a current policy and continuous coverage for protection from claims. Unlike occurrence coverage, which responds to claims that occur during your policy period no matter when the claim is filed, claims-made coverage covers claims that occur on or after your retroactive date and until your policy expires. Therefore, it is important that home inspectors carry continuous E&O and general liability (GL) coverage to ensure that their future tail endorsement covers the most inspections possible.

How does it work?
When a home inspector is ready to leave the industry, their business, or their franchise, they let their insurance company know. Typically, inspectors purchase extended reporting period endorsements in lieu of their insurance renewal.

If the policy’s still effective, the insurance company may cancel the policy and have the tail endorsement begin on that same cancellation date. If the inspector lets their insurance lapse at renewal, the inspector may still have time after the policy expires to purchase tail. Review your policy or ask your insurance broker for their tail purchase deadline.

When purchasing home inspector tail coverage, you often have options. Typically, ERP endorsements come in packages of one, two, or three years of coverage. Which package to purchase depends on your individual risk tolerance. (To learn about risk tolerance, see the conclusion of our article on insurance limits here.) However, there are a few things to consider when making your decision:

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