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Installment Tail Coverage

Installment Tail Coverage

Definition

The purchase of an extended reporting period (ERP, also referred to as "tail coverage") for a claims-made liability policy in 1-year increments. Since the premium for an ERP is fully earned at inception, this alternative has developed in some markets as a means of eliminating the credit risk that would result if an insured were allowed to purchase the usual 3-year or unlimited tail coverage endorsement by making installment payments.

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