Question from an IIABNY member: We have a question about tail coverage we were hoping you could answer. We had a municipal policy for more than 10 years on occurance basis. The account then went to bid and the new broker wrote it on a claims made basis. The municipality is not happy and has requested we re-quote the risk. Our question is, since the current policy is claims made and we will re-write on a occurance basis, how much tail coverage is required?
Answer: New York Insurance Regulation 121 requires the insurer to automatically provide a 60-day tail, but the requirement is 90 days for public entity liability insurance. It also requires the insurer to notify the insured within 30 days after termination of coverage:
“...of the automatic extended reporting period coverage and the availability of, the premium for, and the importance of purchasing additional extended reporting period coverage. For policies subject to audit, retrospective rating or experience rating, the premium for extended reporting period coverage included in the above notices may be quoted on an estimated basis.”
This premium quoting requirement doesn’t apply if the policy cancels for non-payment, unless the insured requests. The insured has 60 days from termination or 30 days from the date the notice is mailed, whichever is greater, to respond.
In general, the insurer has to offer a three-year tail, but it has to offer only a one-year tail for public entity liability.