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How Does It Work? - Extended Reporting Period

Extended Reporting Periods/Retirement

To briefly address Extended Reporting Periods (“ERPs”) and Retirement. As noted in other articles, Claims made policies cover claims that are made (or circumstances that are noticed) during the policy period. So what happens when the policy ends? Firstly, many policies may have a built in (automatic) extended reporting period – in which for something like, 30, 60, or 90 days after the policy expires an Insured can still report a claim and be covered.

After that, you will need to purchase ERP (or “tail”) coverage for Claims arising from work performed up to retirement or the end of the policy, but that may not be filed for months or years afterwards. ERP or tail coverage basically says something like, we are not coving you for any more activities, but if a claim comes in during the next say 5-6 years that arises out of acts or omissions that took place previously - during the period of time our policy covered - we will cover that.

As I say to many professional fiduciaries: retirement means the end of practice, not the end of risk. What you did today could take years to filter through and make its way into a lawsuit against you. Make sure you cover your tail.