The extended reporting period is an extended period of time that your firm can report a claim after the policy is not renewed.
The professional liability is a claims made policy, meaning that the policy that is in place at the time of the claim is the policy that will respond to the claim. If the policy is not renewed, your firm has the option to purchase an extended reporting period. The time period for the extended reporting period will vary with each insurance company, read your firm’s policy to understand what is available. Most common time periods available are one-, three- and five-year extended reporting periods.
What extended reporting period should my firm purchase? On average most firms purchase the three-year extended reporting period. However, there are firm’s that do purchase the five-year extended reporting period, to come close to the statute of limitations and repose time period. Additionally, if your firm was purchased by another firm, there may be a requirement for a specific extended reporting period.
Most policies do come with an automatic 60-day extended reporting period and in that time your firm can choose to purchase a longer extended reporting period.
Of course, the cost of the extended reporting period is a consideration when looking at the time periods available. The premium will be based on the expiring premium of the policy. For example, if your firm’s premium is $5,000 at expiration and the five-year extended reporting period is 200%, the cost of the extended reporting period of $10,000. The cost of the extension can come into the decision making process.
If your firm has any questions with regards to extended reporting periods on a professional liability policy please call, or email, your Professional Underwriter agent for assistance.