An Extended Reporting Period (ERP) is just that – an extended amount of time to report claims under your policy. Understanding the meaning is easy. Knowing when to get one and why it’s so important is not so simple.

Your prior acts or retroactive coverage is by far the most valuable portion of your E&O Insurance policy. This is the date in which you began and maintained current, continuous coverage. An ERP should be purchased anytime you lose your retroactive coverage. Prior acts coverage is lost when a policy is cancelled or expires.

An ERP can generally be purchased for 12, 24, or 36 months; meaning you will have 12, 24 or 36 months to report claims to the carrier after the policy is cancelled or expired. In some cases, an unlimited ERP can be purchased. You should review your policy or contact your agent to find out what is available. The cost of an ERP varies by carrier and is a percentage of the current policy premium (usually ranging from 100% to 250%).

If you have retired or you are selling your company, an extended reporting period endorsement is necessary to ensure that you and your agents are properly covered should a claim arise after the cancellation date of the policy. To avoid having to purchase an ERP due to a lapse in coverage, make sure to renew your policy on time each year. Some carriers may give a day or so leeway, but some do not and they are not required to in any way.

It is beneficial to have an agent to assist you in the renewal process. They will make sure that you have all the documents needed to renew your policy on time.