What Is an Extended Reporting Period Endorsement

What happens if you maintain a business insurance policy for a set number of years, and then cancel it just before someone files a claim against you? In this situation, you may find yourself worried about having proper protection. There are options to help you. One is an extended reporting period endorsement. This type of add-on coverage can help those who need professional liability insurance. Here is what you need to know about this coverage option. 

How Does It Work? 

You may need professional liability insurance if your business provides consulting, advice, or other professional guidance to your customers or clients. Many companies need to have this type of extended liability insurance. It should be a component of your comprehensive business insurance protection. If you need this coverage, consider how it works when a claim occurs. 

Sometimes, a claim can occur immediately after providing advice. Other times, it may take weeks or months for your customer to file a claim. If you are no longer in the professional liability insurance policy you had at the time of the mistake, though, what happens? 

If you have an extended reporting period endorsement on your policy, the coverage continues to offer protection for a period of time after the policy ends. There are several types of coverage available here. 

A basic extended reporting period is very common. This is generally provided with most professional liability policies. It covers you for 30 to 60 days (depending on the details of the policy) from claims after your policy ends. You will see it referred to as ERP most often.  

A second form is supplemental extended reporting period. This type of coverage is ideal for those companies who have more extensive services and risks can go on for years. Most policies can apply from one to five years. Not all insurers offer this type of protection. 

When Should You Consider This Coverage? 

It’s important to consider having this type of business insurance if you plan to switch policies or you are closing down your business. In both cases, your liability may extend beyond the date you cancel your policy. If customers still have the right to file a claim against your business for any reason, you may wish to maintain this protection. 

Work with your business insurance agent on this. Determine if the coverage fits your needs. Discuss the risks to your company if you go without it as well.