FAQ on Extended Reporting Period on Professional Liability.  Many questions come up when it comes time to start thinking about an extended reporting period (ERP) or tail policy.  Here are some of the questions and answers on the ERP.

What are the time periods available for an Extended Reporting Period?  This is a very good question and will depend on what insurance company your policy is with.  Here is an example of an ERP.

Extended Reporting Period

12 months

24 months

36 months

60 months

What is the premium for an ERP? – Again the premium will vary based on the insurance company your firm is insured with and your expiring policy premium.  Here are a few examples of the premium:

Example One:

The additional premium for the optional extended reporting period shall be fully earned at inception and based upon the rates for such coverage in effect at the beginning of the policy term and shall be for one (1) year at 100% of the policy term premium divided by the total number of policy years in the policy term; three (3) years at 190% of the policy term premium divided by the total number of policy years in the policy term; and five (5) years at 250% of the policy term premium divided by the total number of policy years in the policy term.

 

Example Two:

  1. For a one (1) year extended reporting period, 125% of the annual premium for the policy; b. For a three (3) year extended reporting period, 225% of the annual premium for the policy; or c. For a five (5) year extended reporting period, 300% of the annual premium for the policy.

When can my firm purchase an ERP? – When your firm is closing its doors you may purchase the ERP or if your policy has been cancelled or non-renewed.

How long should my firm purchase the ERP for? – There is not a cut and dry answer for this because you cannot predict when and if a claim will be reported.  It is good to consider the longest policy period available but the premium will also factor into that decision.  One major concern to keep in mind is that the policy is not renewable.

Be sure to read your policy to know what the ERP is available for your firm.  If you have questions please call or email your Professional Underwriters agent.

Extended Reporting Period