Extended Reporting Period Endorsements (ERP or Tail) are truly a limited time offer. Most claims-made insurance policies give the insured the right to purchase an ERP with very specific deadlines and requirements. Except for very limited circumstances the right to purchase the ERP cannot be taken away by the insurer. But the right can be lost by the insured. The very important right to purchase comes into play if the firm is being non-renewed or the firm is dissolving.
Most policies state specifically that the written request and full payment must be to the insurer within 30, 60, or 90 days after coverage termination. (To the insurer does not mean that the ERP request has been put in the mail.) Read the policy details dealing with ERP rights and timing carefully. NO TWO POLICIES ARE ALIKE. Get the specific instructions before sending the ERP request with payment.
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. Make sure 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. It is recommended that you send it via overnight mail or preferably by electronic payment. You should 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 never seen the deadline for acceptance and payment waived by even one day.
A day late and this right vanishes forever.
Lee Norcross, MBA, CPCU
Managing Director, CEO
(616) 940-1101 Ext. 7080