Which basis requires a company to purchase a tail coverage policy for incidents incurred but not reported?

The claims-made basis is the correct choice because it specifically pertains to insurance policies that cover claims only if the policy is active when the claim is made. This type of coverage is critical for incidents that occur during the policy period but may not be reported until after the policy has ended. To address this gap, companies often purchase a tail coverage policy, which extends the reporting period, allowing them to report any incidents that happened during the original policy coverage period even after the policy has expired.

In contrast, the occurrence basis covers claims for incidents that occur during the policy period, regardless of when the claim is filed, thus eliminating the need for tail coverage. Risk management and liability coverage bases are broader concepts that do not specifically address the need for additional policies for unreported incidents. Thus, the claims-made basis is uniquely tied to the necessity for tail coverage.