Why You Should Always Offer Your Client an ERP

There are many reasons that an insured may discontinue a policy: retiring, selling, going out of business, coverage no longer required, etc. This is an important time to examine the policy for claims-made coverage and determine the provisions outlined for offering and obtaining Extended Reporting Period (ERP) options.

An ERP (a.k.a. “tail”) is an endorsement subject to an additional premium, purchased to extend the window for reporting a claim. This should not be mistaken as an extension of the coverage period; the occurrence must have taken place after the policy’s stated retroactive date and before the end of the policy period. Dependent on the carrier, ERPs are generally offered for a maximum period of three to five years with shorter windows available.

The prime reason for seeking this option from the carrier for your insured is to give them more protection. What if a claim is made against the insured for an incident that occurred on the last day that the policy was in effect, but is not reported until three months later? Without an ERP, once a claims-made policy or policy with claims-made coverage parts expires, the window of protection is effectively closed for the insured. Wouldn’t you want this option from your agency if it were your coverage?

For more information, contact your Beacon Hill Associates representative at 1-800-596-2156.