The formula to calculate Tail Coverage is:
\[ TC = EP \cdot 2 \]
Where:
Tail Coverage refers to the additional insurance coverage that extends beyond the end of the policy period. It is calculated by multiplying the expiring annual premium by 2.
Let's consider an example:
Using the formula to calculate Tail Coverage:
\[ TC = 1,000 \times 2 = 2,000 \, \text{\$} \]
This demonstrates that with an expiring annual premium of $1,000, the tail coverage would be $2,000.
