ALLIED HEALTHCARE COVERAGE
EXTRA TIME IS ALWAYS A GOOD THING! TEACH YOUR CLIENTS ABOUT ERPS!
Time is the world’s most valuable resource – even in the insurance world! An optional Extended Reporting Provision (ERP) extends the amount of time a policyholder can continue to report claims to the insurance company.
Traditionally, most professional liability insurance is written on a claims-made and claims-reported basis. Coverage is limited to liability only for those claims that are first made against the insured and reported to the company during the Individual Policy Period.
One of the important features of a claims-made and claims-reported policy is that you must have a current policy in force to submit a claim. Once premiums stop, the coverage stops! Even if the alleged incident occurred while the policy was in force, a claim submitted to the insurance company after the coverage period will not be covered.
And since many professional liability claims are not made until months or years after the alleged incident took place, coverage issues can often occur.
This is where an ERP Endorsement comes in in handy.
An ERP Endorsement affords extra time for reporting claims to the insurance company for acts, errors, or omissions occurred during the policy period but are not submitted as claims until after the policy has expired.
This is often referred to as “tail” or “tail coverage.” The reporting period is extended for a certain period of time, such as 1, 2, 3, or more years.
Some important reminders when explaining ERP coverage to your clients:.
- In order for coverage to be triggered under the ERP, the wrongful act must have occurred during the time the policy was in force after the retroactive date. There is no coverage for acts that occur during the ERP.
- The claim has to be first made and reported during the ERP.
- The ERP is provided only if your request is in writing and full premiums are paid within a certain period of time, usually 60 days.
Whether your client is nearing retirement, winding down operations, or making a career change, we recommend you familiarize them with ERP coverage and the options available to them.
If you’d like more information about ERPs – or advice about teaching your clients about them – the Rockwood team is here to help!
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