What is an Extended Reporting Period (ERP)?

The purpose of an Extended Reporting Period (ERP), commonly referred to as “tail” coverage is to provide some degree of E&O protection to an agent who has left the business, become disabled or retired. Instead of purchasing a new claims made policy year after year, an agent can purchase an ERP for usually one to five years. The ERP does just what you’d think; it allows the agent to extend the period of their last active policy under which claims may be filed, following the original policy’s expiration date. An ERP does not cover any new business activities; rather it only addresses claims that arose after the insured’s prior acts date and before the termination date of the insured’s last in-force policy. ERP is not E&O insurance if an agent is still writing business; he or she still needs to keep a policy in force. If an agent elects ERP and then a few months later goes back into business and purchases a new E&O policy, he or she has created a gap.