American Association of Critical-Care Nurses (AACN) Certification Practice Test

Which type of malpractice insurance extends the life of claims made until the end of the statute of limitations?

1. Occurrence-based policy

2. Claims-made policy

3. Tail coverage policy

4. Excess liability policy

The correct answer is: Tail coverage policy

Tail coverage policy is designed to extend the coverage period of claims made under a claims-made policy beyond the expiration of that policy. This type of insurance allows healthcare professionals to safeguard themselves from potential claims that could arise after a policy has ended, as long as the claims are related to services provided during the active period of the claims-made policy. When a claims-made policy is in effect, it only covers claims that are reported during the time the policy is active. However, once the policy is canceled or not renewed, any potential claims that arise from events that occurred during the policy period would no longer be covered unless tail coverage is purchased. This coverage essentially provides an extension, allowing for claims to be made until the end of the statute of limitations, thereby ensuring that the provider is protected even if a claim is filed after the original policy period has ended. In contrast, occurrence-based policies provide coverage for any incidents that occur during the policy period, regardless of when the claims are filed. Excess liability policies offer additional coverage above the limits of other insurance policies but do not extend coverage terms. Thus, tail coverage distinctly fills the gap left when transitioning away from a claims-made policy by extending the claim reporting timeframe.