Key factors to remember for Extended Reporting Periods (ERP) for Design Professionals

Key factors to remember for Extended Reporting Periods (ERP) for Design Professionals

First it is important to understand what an extended reporting period it. It is an extended period of time to report claims on your firm’s Professional Liability policy once the policy is cancelled or non-renewed by your firm or the insurance company. Since most Professional Liability policies are claims made policies the insurance companies offer extended period of time (or tail policy) to report claims.

With most insurance companies your firm must apply for the extended reporting period within 60 days of the expiration date of the policy. Additionally your firm’s projects must be completed in order to apply for the extended reporting period. The policy does not cover active projects.

The time periods and premium for extended reporting periods will vary with each insurance company. The extended reporting period options may look something like the following:

One Year             125% of expiring premium

Two Years           160% of expiring premium

Three Years        180% of expiring premium

Five Years            200% of expiring premium

The premium is based on the expiring policy premium. For example, if your premium is $2,000 and you want to have the 5 year extended reporting period, the total would be $4,000. The premium is due up front and the policy is not renewable.   The limits and deductible will be the same as the expiring policy.

The question that comes up most often with extended reporting periods is are they offered for the statute of limitations. The insurance companies work in many states and each state has a different statute of limitation. The longest extended reporting period most insurance companies offer is five years. It may or not meet the statute of limitation period, however, check with each state to determine the statute of limitation.

There are many factors to consider when your firm is looking into the extended reporting period. If you have questions about extended reporting periods, please call or email your Professional Underwriters agent.


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