Extended Reporting Period Endorsements (ERP or Tail) are truly a limited time offer. Claims-made insurance policies that give the insured the right to purchase an ERP have very specific deadlines and requirements. Only very limited circumstances permit the insurer to not honor the right to purchase an ERP. But the insured has the ability to lose the right to purchase an ERP. A firm normally exercises this important ERP purchase right when a firm is non-renewed, or a firm is dissolving.
The insurer cannot cancel an ERP once put in place and the premium is fully earned. Given these facts premium financing an ERP is not possible.
Policies state specifically that a written request and payment in full must be to the insurer within 30, 60, or 90 days after coverage termination. (Unlike your taxes mailing it on the last day does not work.) Read the policy details about ERP rights and timing carefully. NO TWO POLICIES ARE ALIKE. Get the specific instructions before sending the ERP request with payment preferably via electronic means.
If you are sending the ERP request to your agent, make sure that you send it with enough time for the agent to get payment and the request to the insurer. Ensure that the agent is expecting payment and the request. Trusting the post office by assuming that just because you mailed a request for an ERP with payment to the agent or the insurer does not mean it will happen. Follow-up with your agent if your agent does not acknowledge receipt of the request and payment on a timely basis. If the policy states 30 days, it does not mean 31. I have not seen the deadline for ERP request and payment waived by even one day.
A day late and this right vanishes forever.
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Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080