When is a good time to get an ERP (tail policy)?

When is a good time to get an ERP or extended reporting period (tail policy) for my architecture/engineering firm’s professional liability policy?

Every firm’s situation is different, and it is always best to discuss this with your insurance agent.  But here are some general guidelines as to a good time to obtain the extended reporting period.

When you, if you are a sole proprietor, have fully retired.  The extended reporting period does not cover ongoing projects and cannot be restarted so it is best to obtain the policy once you have fully retired.  This may depend on the effective date of the policy or if you do have continued billings.

If your firm is more than one person and looking into the extended reporting period may be different.  It will depend on whether others in the firm are continuing the practice or is it closing completely?  If the firm is ongoing then this will be an internal conversation on how and if the active policy will continue.  If the firm is closing completely then, again, all projects will need to be complete, and it will depend on the effective date and closing date.

If your firm is being purchased by another firm, then the extended reporting period will depend on the agreement set up in the purchasing agreement.  If your firm is being dissolved the purchasing firm may not want to take on the past liability and therefore an extended reporting period will need to be purchased.  Again, the projects either need to be transferred to the purchasing firm or completed.

There are several situations that could happen with regards to purchasing an extended reporting period.  If you have any questions with regards to your firms’ options on an extended reporting period please call, or email, your Professional Underwriter agent for assistance.ERP tail policy

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